Dear Dr. Don,
I have a prepayment penalty on my mortgage loan for three years. I’d like to refinance sooner. Is there a way a lender can waive the penalty? My loan closed in April 2007 and a servicing company now holds the loan, but they can’t answer my questions.
— Elvie Evade

Dear Elvie,
As you’ve found out, there’s a difference between mortgage origination, mortgage servicing and mortgage investing. The originating lender closed the loan. The servicer manages a stream of loan payments, and the investor holds the mortgage.

Your loan servicing company may or may not own the loan. It’s more likely that they don’t own it and that’s why they can’t answer your questions about waiving the penalty. That’s up to the investor.

A borrower generally gets a lower interest rate or reduced fees when a loan has a prepayment penalty period because the investor is compensated if the borrower decides to refinance. There’s not much incentive for the lender (mortgage investor) to waive the penalty to allow you to refinance at a lower rate.

In an earlier column, “Trying to escape a prepayment penalty,” I say the following:

“Looking for escape clauses in the mortgage contract is something you should discuss with a real estate attorney. I’m not aware of an easy out, other than some prepayment clauses allow the prepayment penalty to be waived if the home is sold.”

The Bankrate calculator “Will you save by refinancing your mortgage?” can show you whether it makes sense to refinance at the lower rate when including the prepayment penalty.