Is Prepayment Penalty As Part of the Balance to Pay the Account In Full on Mortgage Legal ?

In Rumford v. Countrywide Funding Corp., 287 Ill. App. 3d 330, 222 Ill. Dec. 757, 678 N.E.2d 369 (1997), when plaintiff paid off her mortgage, the mortgagee charged her a $ 50 "reconveyance/statement fee" and a $ 15 "prepayment penalty or other charge." These fees were first imposed on plaintiff as part of the balance she needed to pay the account in full on her mortgage. They were not imposed as the result of her requesting special services. Plaintiff sued defendant for breach of contract and violation of the Fraud Act, because her mortgage and note prohibited any prepayment charge. Plaintiff attached to her complaint her mortgage, note, and the payoff statement which specifically listed the "$ 15 prepayment penalty or other charge." Defendant moved for summary judgment and attached the affidavit of its first vice-president, who stated that the charges were not prepayment charges but were charges for preparing and faxing the payoff statement. Rumford, 287 Ill. App. 3d at 332. Based on this affidavit, the trial court granted defendant's motion. The appellate court reversed. It found that although the vice-president's affidavit explained the charges, it only contradicted the payoff statement attached to the complaint, which specifically referred to a prepayment penalty. This contradiction between the affidavit and the payoff statement, the court determined, created fact questions as to exactly what the charges were and whether the vice-president was telling the truth about the charges listed on the payoff statement, thus precluding summary judgment. Rumford, 287 Ill. App. 3d at 335-36.