I am trying to determine if an Early Termination fee charged for terminating a HELOC within the first 36 months is allowed in PA. Our LOS is telling us that it is not and will not render closing papers. If anyone has any insight on this, please do comment.

Thanks!

Have you reached out to them? Most of the time when you get a stop like that they give you a citation in the warning message.

There was a citation and I looked it up. It seems very clear to me that it is not allowed. However, another local bank is charging one and it's the same old story...."why are they doing it if it's not allowed?". I just was curious to see if anyone in PA has any insight that I may have missed.

Well, it is a little hard to opine on a State law if we don't even know what citation is being given.

I apologize. Here is what was cited:

41 PA.Stat.405;10PA ADC 7.8

Well, I think that pretty much puts a nail in the coffin preventing prepayment penalties. The real question is if a request to terminate a $0 balance HELOC before maturity is considered a prepayment penalty and is such a fee authorized under State law. That might take some digging and that digging should be completed by your legal counsel.

Thanks so much for taking a look at it for me. It seems pretty clear cut to me but I always appreciate a guru's input!