§ 7.8. Prepayment penalty prohibited.
(a) Residential mortgage obligations contracted for on or after January 30, 1974 may be prepaid in full without a penalty or other charge before the maturity of the loan obligation.
(b) A residential mortgage lender is entitled to receive a finance charge which includes interest and other charges permissible under the act, up to and including the date of receipt of prepayment from the residential mortgage debtor but not beyond the date of the receipt.
(c) Examples of this section are as follows:
(1) If a mortgage obligation requiring payment on the tenth day of each month is prepaid in full by the residential mortgage debtor and received by the residential mortgage lender on the fifth day of the month, the residential mortgage lender is entitled to the finance charge to the fifth day of the month, when the prepayment was received.
(2) If a residential mortgage obligation requiring payment on the first day of each month is prepaid in full by the residential mortgage debtor to the residential mortgage lender on the fourth day of the month, the residential mortgage lender is entitled to the finance charge to the fourth day of the month, when the prepayment was received.
(3) If a residential mortgage obligation requiring payment on the first of each month is prepaid in full and mailed on or before the first of the month by the residential mortgage debtor to the residential mortgage lender who does not receive such prepayment until the fourth day of the month, the residential mortgage lender is entitled to the finance charge to the fourth day of the month, when the prepayment was received.
(d) Immediately upon receipt of a prepayment, the residential mortgage lender shall stamp or otherwise duly record the date of receipt in its records. Prepayments made by a residential mortgage debtor after office or banking hours or on a nonbanking day on which a residential mortgage lender may provide certain limited services for the convenience of the public or its customers but is not otherwise open for business shall be processed by the residential mortgage lender on the next full business or banking day.
(e) A residential mortgage lender may collect any charge otherwise permitted by the act, this chapter or other law to the extent not inconsistent with section 405 of the act (41 P. S. § 405) and of this section.
Source The provisions of this § 7.8 adopted November 17, 1978, effective November 18, 1978, 8 Pa.B. 3200.
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