Issue #21: Effective notice of prepayment charges

Issue #21: Effective notice of prepayment charges

This dilemma is talked about pertaining to problems #13 and #14, above. Conditions relating to prepayment charges have now been integrated in to the draft legislation connected as Appendix #1; see area 3 and area 7 of the proposed legislation.

Problem #22: needing that “unpaid balance” figures reflect extra funds needed as prepayment charges

Because plenty customers have actually told OCCR which they didn’t understand they certainly were at the mercy of a prepayment penalty until they attempted to cover down their loan early, this proposition might have necessary that every time the lending company notified the debtor regarding the unpaid stability to their loan (as an example, upon demand, or with each monthly declaration, or at year-end), the lending company could be needed to include into that stability the prepayment penalty, to give you an exact image of the particular buck quantity essential to pay back the mortgage.

We felt that the proposition had been a straightforward and revolutionary method to avoid “payoff shock. ” Nonetheless, we now have opted for to not ever add it inside our proposed legislation. snap the link now Like a lot of apparently easy approaches to complex problems, this proposition may likely prove too problematic for loan providers’ billing computers to allow for, at the very least simply for borrowers when you look at the State of Maine. We continue steadily to believe that the style has merit, and then we also note the actions other states have actually taken up to deal with, and indirectly discourage, such charges (Massachusetts, for instance, requires loan providers to add prepayment penalties into the “points-and-fees” calculation to ascertain whether extra “Section 32”-type defenses must certanly be imposed). Nonetheless, until or unless other states or federal regulators follow the idea, we believe that it might be impracticable to need such calculations solely for Maine loans.