I was hoping some of you would tell me what your bank charges your customers, if anything, if they close their HELOC early. I've read that some banks tier their fees based on if the loan closes within 12 mos/24 mos/36 mos. And where on your HELOC note do you describe this fee? In the "Other Provisions" section? And is this fee required to be disclosed on the program disclosure as well? Thanks in advance!

We don't charge a pre-payment fee if a HELOC is paid off early, for us that's within the 1 year. We do charge the third party fees that we had to pay to process and approve the loan, the appraisal fee, flood determination fee etc. We use Laser Pro and it prints in the early disclosure and the note in the paragraph that discusses Fees and Charges.

Be careful. The State of Maryland, at least, considers a "fee recapture" charge to be the equivalent of a prepayment penalty.

http://www.stradley.com/newsletters.php?action=view&id=334

SavnanahOne is correct in that you need to look at state law. You could not do what corkygirl's bank is doing in IN either.

What, when and how you charge the "prepayment penalty", and that's what it is regardless what you call it, will be governed by state law.

As long as the prepayment penalty can only be charged if the borrower closed the account then it does not have to be disclosed in the plan disclosure. BUT if you can charge the fee if you close the account for any reason then it does.