This matter is talked about with regards to problems #13 and #14, above. Conditions relating to prepayment charges have already been integrated to the draft legislation connected as Appendix #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 a lot of customers have actually 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 might have needed that each and every time the lending company notified the debtor regarding the unpaid maine installment loans laws stability on the loan (for instance, upon demand, or with every month-to-month statement, or at year-end), the financial institution will be necessary to include into that stability the prepayment penalty, to offer a precise image of the particular buck quantity required to pay back the mortgage.
We felt that the proposition ended up being an easy and revolutionary method to avoid “payoff shock. ” Nonetheless, we’ve opted for to not consist of 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 the idea has merit, and we additionally 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 incorporate prepayment charges within the “points-and-fees” calculation to find out whether extra “Section 32”-type defenses should always be imposed).