ARM Contract Override State Law?
Is there such a thing as a law that prevents paying pre-payment penalties on an adjustable rate mortgage?
ANSWER: Some states have a prohibition to pre-payment penalties on mortgages. A contract does not override state law. If the state law prohibits pre-payment penalties, then you won’t have to pay the penalties – even if you signed a contract that says you do.
Call the Department of Commerce for your state to find out if your state prohibits pre-payment penalties.