Illegal prepayment penalty/fee?? - Posted by IB (NJ)
Posted by IB (NJ) on December 12, 2000 at 21:33:29:
This topic came up in a post last week concerning a mortgage I’m in the process of getting. Ben (NJ) stated that prepayment fees/penalties were illegal in the state of NJ. Clarification was requested by a number of members on this board but none was given (I don’t think). Anyway, I finally came across my Essentials of New Jersey Real Estate book (the same guide a realtor uses to study for their license) and came across this statement regarding prepayment fees in NJ:
“Under New Jersey Law an institutional lender may not impose a prepayment fee or penalty if a mortgage is fully paid off earlier than was originally planned”.
That’s all that was stated under the “Prepayment” section of my book. My question is, what exactly is the difference between an “institutional” lender and say one that lends in the secondary market? I’m getting a conventional loan through a “licensed mortgage banker” who stated that I may have to pay .5% to waive a prepayment penalty. Does this make sense. The lender is based out of Maryland and the loan is for a property in NJ.