Reg Z – How should the Prepayment Penalty section be completed on the Loan Estimate?

Compliance > Regulation Z - TILA / TRID Specific > Loan Estimates
Q:  How should the Prepayment Penalty section be completed on the Loan Estimate?
 
 
A:  Regulation Z has technical requirements for the completion of the Prepayment Penalty section.  While creditors should review regulatory conditions and commentary, a general description of the requirement is as follows: 
 
The Prepayment Penalty section contains a question as to whether the loan has that feature.  This shall be disclosed as an affirmative or negative answer.  Also, IF an affirmative answer, additional information shall also be included: 
 
  • The maximum amount of the prepayment penalty that may be imposed
  • The date when the period during which the penalty may be imposed terminates
 
 
For example, as excerpted from the refinance loan sample H-24(D), this could appear as follows:
 
 
 
For example, as excerpted from the fixed rate loan sample H-24(B), this could appear as follows:
 
 
 
ADDITIONAL INFORMATION – The regulatory citation for this topic is 12 CFR 1026.37(b). 
 

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