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Committee releases bill letting lenders offer prepayment‑penalty options for business‑purpose mortgages
Summary
A4106 was released after testimony from Rocket Mortgage representatives who said the bill preserves consumer protections while letting lenders offer optional prepayment penalties on business‑purpose loans to lower upfront pricing for investors and expand affordable rental supply.
The Financial Institutions and Insurance Committee released Assembly Bill A4106, which would clarify that "mortgage loans" means loans primarily for personal, family or household purposes and preserve existing restrictions on prepayment penalties for consumer mortgages while allowing lenders to negotiate optional prepayment penalties on business‑purpose (investment) loans.
Sal Anderton of Porzio Governmental Affairs testified on behalf of Rocket Mortgage that the bill preserves protections for consumers obtaining financing for primary residences while allowing optional prepayment penalties for investors that can reduce upfront pricing and expand affordable rental housing supply. Michael Stidham, Rocket Mortgage's director of regulatory affairs, said the company offers business‑purpose products with different prepayment options and that optional prepayment penalties can be used to buy down rates.
Committee members probed whether the change could push rates up for ordinary homeowners or affect rents; witnesses said most market evidence from other states shows differentiation is common and that the bill provides optionality without removing consumer safeguards. The committee took a motion, recorded affirmative votes from members present, and announced the bill had been released.
