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Underneath the new prepayment penalty threshold, a consumer credit deal secured because of the buyer’s dominating house is a high-costs mortgage in the event that:

• the latest collector is enforce prepayment punishment, just like the discussed during the several C.F.Roentgen. (b)(6) , over 3 years after consummation or account starting; or
• the brand new prepayment punishment is also meet or exceed dos per cent of prepaid service matter. eleven

One to difficulty in the supply is the fact Regulation Z as well as prohibits prepayment penalties to possess higher-pricing mortgages. a dozen Thus, brand new endurance creates an enthusiastic anomaly: In the event the financing possess an excellent prepayment punishment you to crosses the new threshold, its a premier-pricing home loan not as much as (a)(1)(iii) , yet , a high-prices financial cannot has actually a beneficial prepayment punishment significantly less than (d)(6) .

The Dodd-Frank Act added the following the new substantive restrictions to your HOEPA finance, since the used for the Regulation Z:

Brand new CFPB talked about this issue on the preamble towards last signal, explaining that the fresh new prepayment penalty shot efficiently expose[es] an optimum period during which a prepayment penalty ount that will end up being enforced, to your a transaction covered of the a consumer’s principal hold, apart from a home loan which is exempt of higher-costs financial visibility under (a)(2). thirteen Quite simply, creditors giving loans secure because of the a consumer’s dominant house (but structure loans, opposite mortgages, and you can particular government secured fund fourteen ) do not enforce prepayment penalties you to definitely cross the brand new thresholds discussed in past times. Continue Reading