Do all FHA loans require you to pay a penalty if you prepay your mortgage early/? One lender told me that its

Asked by Primatanya, 08816 Thu Apr 23, 2009

required for FHA loans. Is this true?

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Web reference:


Deborah Stas…, Agent, Martinsville, NJ
Thu Apr 23, 2009
State of New Jersey Department of Banking and Insurance
Bulletin 07-12
Commitment Prepayment Penalties
N.J.S.A. 46:10B2 provides that the “[p]repayment of a mortgage loan may be
made by or on behalf of a mortgagor at any time without penalty.” The mortgage
processing rules, at N.J.A.C. 3:116.5(e), provide that “[a] lender who commits to make a
mortgage loan may assign the commitment to another lender authorized to make
mortgage loans in this State, or allow another such lender to close the loan, provided
that… [t]he lender who committed to make the mortgage loan shall remain responsible
for ensuring that the ultimate lender closes the loan in accordance with the terms and
conditions of the commitment and applicable New Jersey and Federal laws and
regulations.” In short, the assignment of a loan may not, alone, operate as an amendment
of the loan’s terms. Consequently, if a commitment is made by a New Jersey licensed
lender subject to N.J.S.A. 46:10B2,it may not include a prepayment penalty,
irrespective of the regulatory jurisdiction applicable to the lender who may take such loan
commitment by assignment. By the same token, the terms of such a commitment may
not be amended to include prepayment penalties by operation of an assignment alone.
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0 votes
Mike Linkena…, Agent, Jacksonville, FL
Thu Apr 23, 2009
Prepayment pentalties are in some loans, regardless of what state you are in. However, it is untrue that they are in all FHA loans...
0 votes
Deborah Stas…, Agent, Martinsville, NJ
Thu Apr 23, 2009
There are no prepayment penalties for paying your mortgage off early in the State of NJ. If you have additional questions, please feel free to contact me.
0 votes
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