Regulatory Alerts2022-12-02
Regulatory Guidance on Prepayment Penalty Protections
The New Mexico Financial Institutions Division clarifies that the Residential Home Loan Act prohibits prepayment penalties for obligations secured by a mortgage on a residence, regardless of whether the borrower is a business entity. This protection applies to all legal entities and properties defined as residences, including recreational investments, provided the lender is not a federally chartered institution. The guidance relies on statutory language and court precedents to establish that the law confers a broad right to prepay without penalty to any individual or legal entity.
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