Some banks have a minimum interest charge, say $10-50 that is charged if a loan is paid off before the minimum interest charge has been accrued. From the few threads that I found, it appears as tho folks are in agreement that this is a prepayment penalty. Question: Does this get included on the GFE in the Summary of Loan section as a prepayment?

Not legal in my state.

Is this an anticipatory charge, meaning, you're trying to tell the borrower if you pay this loan you're applying for off before it reaches a certain point, you'll have a prepayment penalty? If so, that is NOT a cost of getting the loan so imho, the answer is no, it does not belong on the GFE. The GFE is supposed to show the costs of GETTING the loan. It shouldn't include a charge that MIGHT happen after the borrower gets the loan.

From the definitions in RESPA:

Prepayment penalty has the same meaning as "prepayment penalty" under Regulation Z (12 CFR part 226).

From Regulation Z:

Paragraph 18(k)(1)

1. Penalty. The term penalty as used here encompasses only those charges that are assessed strictly because of the prepayment in full of a simple-interest obligation, as an addition to all other amounts. Items which are penalties include, for example:

ii. A minimum finance charge in a simple-interest transaction. (See the commentary to §1026.17(a)(1) regarding the disclosure of a minimum finance charge as directly related information.) Items which are not penalties include, for example, loan guarantee fees.

So, I would say the technical answer is yes, regardless of what sense it might make. I have never seen a mortgage loan with minimum finance charge language.

TR, I was referring to checking the prepayment penalty box on page 1 of the GFE and disclosing the minimum F/C as the prepay amount. I agree that it should not be included as a charge on the GFE.

Randy, thank you for your response. I agree that this is somewhat unusual.

So you don't typically charge this to your borrowers?.......well..........be careful with that!!!!

So is there agreement that the Prepayment Penalty Box on page 1 of the GFE should be checked and the min. amount disclosed?

Yes.