AN ACT RELATING TO PROPERTY -- MORTGAGES OF REAL PROPERTY

This bill restricts mortgage prepayment penalty rules to loans on owner-occupied properties with one to four dwelling units. Under the new provisions, lenders must allow full prepayment after one year without penalty, and any prepayment fees during the first year cannot exceed two percent of the remaining balance. Alternatively, lenders may charge prepayment penalties if they clearly disclose the terms in writing, obtain borrower consent, and ensure no penalty applies after 60 months. The law also requires lenders offering penalty-based loans to also offer a product without penalties and clarifies that prepayment penalties are not considered interest.