An amendment numbered 3 printed in House Report 110-450 to require a borrower to receive the option of a mortgage without a prepayment penalty, if they are offered an amendment with a prepayment penalty. Sets the maximum time for a prepayment penalty of 3 years and a maximum prepayment amount of 3% of the loan for the first year, 2% for the second year and 1% for the third year.

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   Change 1: Inserts new text on page 66, line 3

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   Inserted: (2) Phased-out penalties on qualified mortgages.--A qualified mortgage (as defined in subsection (c)) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated in excess of the following limitations:

   Inserted: (A) During the 1-year period beginning on the date the loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan.

   Inserted: (B) During the 1-year period beginning after the period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of the outstanding balance on the loan.

   Inserted: (C) During the 1-year period beginning after the 1-year period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the outstanding balance on the loan.

   Inserted: (D) After the end of the 3-year period beginning on the date the loan is consummated, no prepayment penalty may be imposed on a qualified mortgage.

   Original wording

   Page 66, after line 3, insert the following new paragraph (and redesignate the subsequent paragraph accordingly):

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   Change 2: Inserts new text on page 66, line 11

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   Inserted: (4) Option for no prepayment penalty required.--A creditor may not offer a consumer a residential mortgage loan product that has a prepayment penalty for paying all or part of the principal after the loan is consummated as a term of the loan without offering the consumer a residential mortgage loan product that does not have a prepayment penalty as a term of the loan.

   Original wording

   Page 66, after line 11, insert the following new paragraph:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed