I would like to know about prepayment penalties on second mortgages in the state of Washington. I have heard that it is against the law in the state of WA to charge anymore than $550.00 for paying off a second mortgage early. Please give me a specific law code number if this is true.
State specific questions can be difficult, but here is something. An authorized lender may not collect a prepayment penalty on the following loans:
(a) Any nonmortgage loan made at rates authorized by the act; or
(b) Any junior lien mortgage loan made at rates authorized by the act; or
(c) Any loan made by a licensee that is not a "creditor" under DIDMCA.
This is according to the Washington Administrative Code (WAC) § 208-620-560(7). This link takes you directly to this section of the code.
An authorized lender must provide a borrower or potential borrower with a disclosure of whether or not the loan contains a prepayment penalty within 3 days of receipt of a loan application. WAC §208-620-510(1).
There was nothing found with reference to a cap of $550 or any amount. There could be a court case or legal opinion that created this amount, but it isn't in the state Code.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
State specific questions can be difficult, but here is something. An authorized lender may not collect a prepayment penalty on the following loans: