Since July 1, 2008, the following audit has been appearing in all Connecticut high cost home loans if the DocMagic user enters any prepayment penalty information in DocMagic:

WARNING: PREPAYMENT PENALTY NOT PERMITTED FOR CONNECTICUT HIGH COST LOANS

Pursuant to Public Act No. 08-176, effective July 1, 2008, prepayment penalties on high cost home loans are prohibited.  Prior to July 1, prepayment penalties were permitted; provided that the prepayment penalty period did not exceed 3 years, and penalties did not exceed 3% in year 1, 2% in year 2, and 1% in year 3.  Furthermore, under the prior law, the source of the prepayment funds could not be a refinancing by the lender or lender affiliate, and the borrower's total monthly debts at consummation could not exceed 50% of the borrower's verified monthly gross income.  

Accordingly, based on the current prepayment penalty prohibition on Connecticut high cost home loans, note that the following audit has been removed from the DocMagic software:

WARNING: PREPAY PENALTY TERM ON CT HIGH-COST LOANS CANNOT EXCEED 36 MONTHS

If you have any questions regarding the contents of this article, please contact DocMagic, Inc.'s Compliance Department.