Reg Z – What is a Prepayment Penalty?

Compliance > Regulation Z - TILA / TRID Specific > Loan Estimates
Q:  What is a Prepayment Penalty?
 
 
A:  Regulation Z requires the disclosure of a Prepayment Penalty on the Loan Estimate.  For that disclosure purpose, this refers to a change imposed for paying all or part of a transaction’s principal before the date on which the principal is due, other than a waived, bona fide third-party charge that the creditor imposes if the consumer prepays all of the transaction’s principal sooner than 36 months after consummation. 
 
 
 
ADDITIONAL INFORMATION – The regulatory citation for this topic is 12 CFR 1026.37(b). 

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