Issue #21: Effective notice of prepayment charges

Issue #21: Effective notice of prepayment charges

This dilemma is discussed pertaining to Issues #13 and #14, above. Conditions relating to prepayment charges have already been integrated to the draft legislation connected as Appendix #1; see Section 3 and part 7 of the proposed legislation.

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

Because a lot of customers have actually told OCCR which they didn’t understand these people were at the mercy of a prepayment penalty until they attempted to cover down their loan early, this proposition might have necessary that each and every time the lending company notified the debtor for the unpaid balance on the loan (for instance, upon demand, or with every month-to-month declaration, or at year-end), the financial institution will be expected to include into that balance the prepayment penalty, to deliver a detailed picture of the specific dollar quantity essential to pay back the mortgage.

We felt that the proposition had been a straightforward and revolutionary method to avoid “payoff surprise. ” But, we now have selected not to ever add it inside our proposed legislation. Like countless apparently easy approaches to complex dilemmas, this proposition would probably show too burdensome for loan providers’ billing computers to allow for, at the least only for borrowers when you look at the State of Maine. We continue steadily to believe the style has merit, therefore we also note the actions other states have taken up to deal with, and indirectly discourage, such charges (Massachusetts, as an example, requires loan providers to incorporate prepayment charges into the “points-and-fees” calculation to ascertain whether additional “Section 32”-type defenses must certanly be imposed). Lees verder