Issue #21: Effective notice of prepayment penalties

Issue #21: Effective notice of prepayment penalties

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

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

Because many consumers have told OCCR which they didn’t understand these were at the mercy of a prepayment penalty until they attempted to cover their loan off early, this proposition could have needed that every time the lending company notified the debtor of this unpaid stability on the loan (as an example, 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 give an exact image of the particular buck amount required to pay back the mortgage.

We felt that the proposition had been an easy and revolutionary solution to avoid “payoff shock. ” Nonetheless, we now have selected not to ever include it within our proposed legislation. Like many apparently easy approaches to complex dilemmas, this proposition may likely show too burdensome for loan providers’ billing computers to allow for, at the very least simply for borrowers into the State of Maine. We continue steadily to believe 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, as an example, calls for lenders to incorporate prepayment charges within the “points-and-fees” calculation to ascertain whether extra “Section 32”-type defenses should really be imposed). Continue reading Issue #21: Effective notice of prepayment penalties