Prepayment Penalties

"B. Every loan contract, except as provided in subsection D, that is secured by a first deed of trust or first mortgage on real estate if the principal amount of the loan is less than $75,000, shall:

1. Permit the prepayment of the unpaid principal at any time; and

2. Not provide for a prepayment penalty in excess of one percent of the unpaid principal balance.

C. Any prepayment penalty provision in violation of subdivision B 2 shall be unenforceable as to the amount in excess of one percent of such balance. (Va. Code Ann § 6.2-421)

The prepayment penalty in the case of a loan secured by a mortgage or deed of trust on a home that is occupied or to be occupied in whole or in part by a borrower shall not exceed two percent of the amount of such prepayment. (Va. Code Ann § 6.2-422)

A. Any borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of § 6.2-327, shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan if the prepayment penalty shall not exceed two percent of the principal amount prepaid, but no prepayment penalty shall be imposed if:

1. The loan is refinanced or consolidated with the same lender or a subsequent noteholder;

2. The loan is accelerated due to default;

3. A partial prepayment is made; or

4. In the case of an open-end credit plan, as defined in § 6.2-300, where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage. (Va. Code Ann § 6.2-423)

A. The Rule of 78 shall not be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on any (i) loan of money made after January 1, 1991, with an initial maturity of more than 61 months; or (ii) sales contract made after January 1, 1991, that necessitates a loan as described in clause (i).

B. On any loan of money made with an initial maturity and corresponding amortization period of 61 months or less and that is payable in equal periodic installments, the Rule of 78 may be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on the loan or contract. (Va. Code Ann § 6.2-404)"