| Chapter 280 |
| 2026 -- S 3073 AS AMENDED Enacted 06/26/2026 |
| A N A C T |
| RELATING TO PROPERTY -- MORTGAGES OF REAL PROPERTY |
Introduced By: Senators Britto, and McKenney |
| Date Introduced: March 13, 2026 |
| It is enacted by the General Assembly as follows: |
| SECTION 1. Section 34-23-5 of the General Laws in Chapter 34-23 entitled "Mortgages |
| of Real Property" is hereby amended to read as follows: |
| 34-23-5. Prepayment of mortgage loans. |
| (a) Every bank, trust company, loan company, building-loan association, credit union, |
| finance company and other person(s) making a loan or loans secured by a mortgage or mortgages |
| on real estate located in Rhode Island containing thereon dwelling houses of not more than four (4) |
| dwelling units shall provide in the mortgage note, and in any event the loan or loans shall be upon |
| the condition that the full payment of mortgage may be made at any time after one year from the |
| making of the loan without penalty, provided further, that during the first year, penalty or other |
| charges for prepayment shall not exceed two percent (2%) of the balance due at date of the pay- |
| off. If interest or other charges in connection with the loan or loans shall have been prepaid or |
| included in the face of the mortgage, the holder thereof shall rebate the interest or other charges |
| under regulations promulgated by the director of the department of business regulation. |
| (b) Alternatively a bank, trust company, loan company, building-loan association, credit |
| union, finance company and other person(s) making a nonpurchase money loan or loans secured |
| by a mortgage or mortgages on real estate located in Rhode Island containing on it dwelling houses |
| of not more than four (4) dwelling units, may impose a prepayment penalty or other similar charges |
| for the prepayment of a mortgage loan notwithstanding the prepayment penalty limitation imposed |
| in subsection (a), but only if: |
| (1) The terms, conditions and amount of the prepayment penalty or other similar charges |
| are prominently and conspicuously disclosed in writing to the borrower; |
| (2) The borrower agrees and consents to be bound by these terms and conditions; and |
| (3) Provided no prepayment penalty shall be imposed for any prepayment occurring more |
| than sixty (60) months after the date of such loan. |
| (c) Any bank, trust company, loan company, building-loan association, credit union, |
| finance company or other lender that chooses to offer a mortgage product pursuant to subsection |
| (b) shall have available a similar mortgage product that complies with the limitations set forth in |
| subsection (a) and all applicable federal regulations. |
| (d) Any prepayment penalty imposed under this section shall not be construed as interest |
| under the provisions of ยง 6-26-2. |
| (e) The limitations under this section shall only apply to mortgage loans made for real |
| estate containing owner-occupied dwelling houses of not more than four (4) dwelling units only if: |
| (1) The terms, conditions, and amount of the prepayment penalty or other similar charges |
| are prominently and conspicuously disclosed in writing to the borrower; |
| (2) The borrower agrees and consents to be bound by these terms and conditions; and |
| (3) Provided no prepayment penalty shall be imposed for any prepayment occurring more |
| than sixty (60) months after the date of such loan. |
| SECTION 2. This act shall take effect upon passage. |
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| LC005273 |
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