This problem is talked about pertaining to Issues #13 and #14, above. Conditions relating to prepayment charges have now been included into the draft legislation connected as Appendix no. 1; see part 3 and area 7 of this proposed legislation.
Problem #22: needing that “unpaid balance” figures reflect extra funds needed as prepayment charges
Because countless customers have actually told OCCR that 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 every time the lender notified the debtor associated with unpaid stability to their loan (for instance, upon request, or with every month-to-month declaration, or at year-end), the financial institution will be necessary to include into that stability the prepayment penalty, to produce a precise image of the particular dollar quantity required to repay the mortgage.
We felt that the proposition had been an easy and revolutionary option to prevent “payoff surprise. ” Nonetheless, we now have plumped for to not add it inside our proposed legislation. This proposal would likely prove too difficult for lenders’ billing computers to accommodate, at least just for borrowers in the State of Maine like so many seemingly simple solutions to complex issues. We continue steadily to believe that the idea has merit, so we also note the actions other states have actually taken fully to deal with, and indirectly discourage, such penalties (Massachusetts, for instance, calls for loan providers to add prepayment charges when you look at the “points-and-fees” calculation to ascertain whether additional “Section 32”-type defenses should really be imposed). But, until or unless other states or federal regulators follow the style, we believe it might be impracticable to require such calculations entirely for Maine loans. Continue reading Issue #21: Effective notice of prepayment charges