Early Payoff (EPO) Recapture

[Will Johnston]

I refinanced a property about four months ago, and when rates dropped over the summer, I began the process of refinancing again.  Due to lackluster service and better pricing elsewhere, I did so with a different lender.

Since then, I've learned about the concept early payoff recapture, and, not wanting to cause any problems for my previous lender, I inquired about the recapture period on the previous loan.  Unfortunately, it is six months, not four.

I contacted both my current lender to see what it would cost to extend my lock for another couple of months (around $2k) and reached out to the previous lender to see if that's something they would want to cover to avoid the EPO recapture, which I believe would be quite a bit more than $2k.

They had no interest in doing that, so before making a decision on how to proceed, I wanted to gather a bit of collective wisdom from the forums.

My first question is, does anyone have any creative ideas for how to work around this?  I'm really not out to mess over my former lender.  If I had known about this concept, I wouldn't have even started this process until that clock was close to expiring.  I've thought about letting my loan float and re-lock, but that would cost even more than just extending the lock.

My second question is regarding liability.  To the best of my knowledge, nothing in my closing documents discussed EPO recapture, and my closing disclosure specifically says that there is no prepayment penalty.  Am I correct in assuming that the liability for the recapture lies solely with the lender?