Limits the provisions related to prepayment of real estate mortgages to those mortgage loans made for real estate containing owner occupied dwelling houses of not more than four dwelling units.

Plain-English Summary

This bill would change Rhode Island's existing rules about paying off a mortgage early (called "prepayment") so that those rules only apply to a specific category of home loans. Currently, state law includes protections related to prepaying a mortgage — such as limiting or regulating fees a lender can charge if a borrower pays off their loan ahead of schedule. This bill would narrow the scope of those protections so they only cover mortgage loans on properties where the owner lives in the home and the property has four or fewer housing units (like a single-family home, duplex, triplex, or four-unit building).

In practical terms, this means that borrowers who live in their own smaller residential properties would keep the existing prepayment protections. However, mortgages on larger apartment buildings, commercial real estate, or investment properties where the owner does not live would no longer be covered by these same state rules. Lenders and borrowers dealing with those larger or non-owner-occupied properties would have more flexibility — or face fewer restrictions — when it comes to early payoff terms and any associated fees.

This bill primarily affects real estate investors, commercial property owners, and lenders who deal with larger or non-owner-occupied properties, as they would no longer be subject to these particular state mortgage prepayment rules. Everyday homeowners who live in their own homes with four or fewer units would not see a change in their current protections. The bill has been referred to the House Judiciary Committee, which has recommended holding it for further study.