2014 Louisiana Laws
Revised Statutes
TITLE 9 - Civil Code-Ancillaries
RS 9:3532.1 - Prepayment penalties in connection with simple interest real estate secured loans
§3532.1. Prepayment penalties in connection with simple interest real estate secured loans
A. As a condition of the consumer's being permitted to prepay a consumer loan secured by a mortgage on immovable property in full prior to the loan's maturity, an extender of credit may contract for and receive a prepayment penalty in an amount not to exceed:
(1) Five percent of the unpaid principal balance if the loan is prepaid in full during the first year of its term.
(2) Four percent of the unpaid principal balance if the loan is prepaid in full during the second year of its term.
(3) Three percent of the unpaid principal balance if the loan is prepaid in full during the third year of its term.
(4) Two percent of the unpaid principal balance if the loan is prepaid in full during the fourth year of its term.
(5) One percent of the unpaid principal balance if the loan is prepaid in full during the fifth year of its term.
B. No prepayment penalties shall be assessed if the loan is prepaid in full after the fifth year of its term. Prepayment penalties may be assessed under this Section only with respect to consumer real estate secured loans that bear simple interest, and that have an original principal balance of twenty-five thousand dollars or more, and that are payable over a term of seven years or longer.
C. Notwithstanding any other provision of law to the contrary, no prepayment penalty or similar fee or charge shall be due, assessed, charged, collected, paid, held in escrow, or contracted to be paid if all or part of a prepayment of all or part of an outstanding loan balance is made from proceeds paid in full or partial satisfaction of a claim or claims made under a policy or policies of insurance insuring against casualty, flood, or other loss or damage to property securing the loan being prepaid in connection with a gubernatorially declared disaster.
Acts 1995, No. 1184, §2; Acts 2006, No. 188, §2.
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