Limits mortgage prepayment rules to mortgages on owner-occupied properties with one to four dwelling units.

What This Bill Does

This bill would narrow the scope of Rhode Island's existing mortgage prepayment rules, limiting them to apply only to home mortgages on properties where the owner actually lives, and only for buildings with four or fewer units (such as a single-family home, duplex, or small multi-family property). "Prepayment rules" refer to laws that govern whether and how a lender can charge fees or penalties when a borrower pays off their mortgage early — before the scheduled end of the loan.

Who It Affects

Under this bill, the prepayment protections would specifically cover everyday homeowners living in their own homes or small residential properties. This means if you own and live in a single-family home or a small building with up to four units, the existing rules protecting you from early payoff penalties would still apply to your mortgage. However, the bill would remove these same rules from mortgages on investment properties, commercial real estate, or larger residential buildings where the owner does not personally live — meaning lenders could have more flexibility to set their own prepayment terms for those types of loans.

Current Status

The bill has been introduced in the Rhode Island Senate and referred to the Senate Commerce Committee, where it will be reviewed before any further action is taken. No vote has occurred yet.