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#82619 - 05/23/03 08:12 PM Doc Prep or Prepayment Penalty?
Deena Offline
Power Poster
Deena
Joined: Nov 2000
Posts: 2,701
PA
Does anyone have a HELOC product where no fees are paid by the borrower up front but where a "doc prep" fee is "waived" initially and only paid if the line is closed within a specific period of time? On the one hand, it costs us money to "prepare the documentation" and put the loan on the books and we lose money if the line is closed before we recoup our costs; but, that sounds an awful lot like a prepayment penalty and I'm not sure we can do it. I called Kirchman and they said it's fairly common practice, but they don't deal with PA laws. Any thoughts?
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#82620 - 05/27/03 05:59 PM Re: Doc Prep or Prepayment Penalty?
DebNP Offline
100 Club
DebNP
Joined: Oct 2001
Posts: 179
Eastern PA and NJ
We have something similar to what you describe. We charge a doc prep fee, and then there is a dormancy fee, if the account is not used/closed within 13 months. Also certain promo products, we have a Recapture Fee, which is charged if the account is closed within a year. These are disclosed upfront and in the contract, and are not prepayment penalties, which I believe would be a higher amount.

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