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#392464 - 07/27/05 08:39 PM Language for Prepayment Penalty
Anonymous
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I was wondering if anyone had examples of what language is used by your bank for a prepayment penalty on a note? Thanks for your time.

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#392465 - 07/27/05 09:01 PM Re: Language for Prepayment Penalty
sansan Offline
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Joined: Apr 2004
Posts: 161
The hat rack
Here are examples shared that comes from a company we sell to:

Example no. 1 - "If I make a full prepayment, the Note Holder may charge me for the privilege of prepayment if I prepay the loan in the first 36 months after the date of the loan. The prepayment penalty shall be an amount equual to 5% of the principal balance prepaid."

Example no. 2 - "If I make a full prepayment, the Note Holder may charge me for the privilege of prepayment if I prepay the loan in the first 60 months after the date of the loan. The prepayment penalty shall be an amount equal to six months advance interest on the amount of the prepayment that, when added to all other partial prepayments during the twelve-month period immediately preceding the date of the full prepayment, exceeds 20% of the original principal amount of this Note."

The language will vary by state.

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#392466 - 07/28/05 11:37 AM Re: Language for Prepayment Penalty
Anonymous
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Thanks Sansan for your help.

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#392467 - 07/28/05 02:27 PM Re: Language for Prepayment Penalty
Rocky P Offline
Power Poster

Joined: Jun 2003
Posts: 6,902
Florida
Quote:

I was wondering if anyone had examples of what language is used by your bank for a prepayment penalty on a note? Thanks for your time.


Anon, prepayment penalties are governed by state law. Some states have prohibitions and caps, some prohibit and in some cases, the ability to charge prepayment may be governed by the lender's type of charter.

There may not be a standard prepayment clause for all states. You may want to check in the state specific threads, contact your form vendor or obtain the information from an investor if you're selling.
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#392468 - 07/28/05 07:38 PM Re: Language for Prepayment Penalty
Anonymous
Unregistered


Thanks alot SC-Bnkr

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