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#47186 - 12/05/02 10:49 PM Prepayment Penalty Fees for 1st and 2nd mortgage
Anonymous
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With all the predatory loan laws that have passed and the recent preemption and state law comments, I need help with Prepayment penalty fee allowances if any for 1st and 2nd mortgage lien loans.

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#47187 - 12/09/02 03:13 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
JulieB Offline
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Joined: Apr 2002
Posts: 38
SC
The South Carolina Consumer Protection Code does not allow prepayment penalties.

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#47188 - 12/09/02 04:28 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
RVFlyboy Offline
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Soaring over Georgia
But keep in mind most of the provisions of the SC Consumer Protection Code do not apply to first mortgage real estate loans (37-3-105). Specifically the section of the code related to prepayment penalties (37-3-209) does not apply to first mortgage real estate loans, even if consumer purpose.
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#47189 - 12/09/02 04:55 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
Suwannee Offline
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Suwannee
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Florida
Go to this website for prepayment penalty information on mortgage loans in S.C.

http://www.lpitr.state.sc.us/code/t37c010.htm

Look at 37-10-103.
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#47190 - 12/09/02 05:07 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
RVFlyboy Offline
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Soaring over Georgia
Thanks for the catch - you are correct that even on first mortgage loans under $100,000 there is no ability to have a prepayment penalty. But you can have one on a first mortgage loan over $100,000.
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#47191 - 09/23/03 11:39 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
tiner Offline
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tiner
Joined: Sep 2003
Posts: 48
South Carolina
Would a minimum interest charge be considered a prepayment penalty?

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#47192 - 09/24/03 12:37 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
RVFlyboy Offline
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I believe it would be.
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#47193 - 07/29/06 02:53 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
Jan94 Offline
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Joined: Mar 2001
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USA
Our bank is working on a HELOC promotion with a teaser rate fixed for 6 months and then variable. One of the conditions is that the borrwer must maintain the $10,000 balance for the entire 6 months or the rate will increase. Another source had indicated to us that in some states this may be considered a "prepayment penalty" and may be prohibited. Would this be the case in SC? Thank you.

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#47194 - 10/16/06 03:29 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage
Rocky P Offline
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Florida
I understand that SC Code 37-23-70(k) supersedes 37-3-210 prepayment penalties for primary residences, which most of the HELOCS are secured by, and allows for capture of origination fee at application. This was a recent change.
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#641344 - 11/22/06 05:51 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage Rocky P
forton Offline
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Can someone clarify or confirm?
1. 1st mortgage secured by a home (occupancy doesn't matter): we can charge an origination fee and it is not rebatable.
2. junior mtg secured by primary residence: we can charge an origination fee and it is not rebatable (due to the recent change in 37-23-70)
3. junior mtg secured by a home other than the primary residence: origination fee would still be rebatable.

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#646308 - 12/04/06 02:29 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage forton
Cowboys Fan Offline
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Posts: 4,600
SC
Originally Posted By: brown
Can someone clarify or confirm?
1. 1st mortgage secured by a home (occupancy doesn't matter): we can charge an origination fee and it is not rebatable.
2. junior mtg secured by primary residence: we can charge an origination fee and it is not rebatable (due to the recent change in 37-23-70)
3. junior mtg secured by a home other than the primary residence: origination fee would still be rebatable.




Bump - I'm curious about this too
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#658253 - 12/28/06 02:35 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage Cowboys Fan
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Bump again
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#670028 - 01/23/07 01:01 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage Cowboys Fan
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I'm persistent - bump again
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#670141 - 01/23/07 03:31 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage Cowboys Fan
CDTR Offline
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Joined: Jul 2005
Posts: 46
Okay, I'll give this a try.
"1. 1st mortgage secured by a home (occupancy doesn't matter): we can charge an origination fee and it is not rebatable."

Correct, 37-3-105 excludes a first mortgage from the definition of a consumer loan.

"2. junior mtg secured by primary residence: we can charge an origination fee and it is not rebatable (due to the recent change in 37-23-70"

Correct again.

"3. junior mtg secured by a home other than the primary residence: origination fee would still be rebatable."

Correct, assuming it is a "consumer" loan. It would not have to be rebated on business purpose loans.

A couple of other observations:

"Thanks for the catch - you are correct that even on first mortgage loans under $100,000 there is no ability to have a prepayment penalty. But you can have one on a first mortgage loan over $100,000."

I believe section 37-10-103 was amended a year or two ago and the $100,000 was increased to $150,000.

"I understand that SC Code 37-23-70(k)supersedes 37-3-210 - prepayment penalties for primary residences, which most of the HELOCS are secured by, and allows for capture of origination fee at application. This was a recent change."

While this may be true for first mortgage HELOCs, I'm not quite sure it would work for junior lien HELOCs because, as I understand it, section 37-3-202, realted to additonal charges, allows only for annual and over-the-limit charges, and does not allow for an origination fee, on "open-end credit pursuant to a lender credit card or similar arrangement." The definition of that term in 37-1-301(16)includs this statement, "An open-end credit agreement under which a person can effect an immediate advance by check or other draft qualifies as a lender credit card or similar arrangement." That would include our bank's HELOCs, and I suspect, a lot of others. Even though 37-23-70 would allow you not to rebate an origination fee if the fee were authorized, I'm not so sure it would autorhize the fee in the first place. This might be a good question for the Department of Consumer Affairs.

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#670785 - 01/23/07 11:32 PM Re: Prepayment Penalty Fees for 1st and 2nd mortgage CDTR
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Thank you for taking the time to respond - I appreciate it.
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