I know you often warn home buyers about costly, unnecessary and pure-profit ''junk fees'' and ''garbage fees'' some mortgage lenders charge borrowers. I have been a real estate broker almost 16 years and just encountered a new fee on a home equity loan. When they obtained this home equity loan, my sellers paid no up-front costs. They inquired about a prepayment penalty and were told there was none.
Termination fee sounds like a creative name for a prepayment penalty.
I suggest your sellers try to negotiate with the lender to waive that unconscionable fee. It won't hurt to ask. I had a similar situation on a rental house prepayment penalty, and the lender cut the fee in half. Perhaps your sellers should have their attorney write a strong letter to the lender, explaining the borrowers were told there was no prepayment penalty and this surely is a prepayment penalty. Of course, the lender may respond that the termination fee was in the written mortgage and the lender is not bound by oral statements of the loan salesperson.