What is one of the requirements for prepayment penalties under Rhode Island law?

One of the requirements for prepayment penalties under Rhode Island law is that for nonpurchase loans, a borrower must have access to similar loan products that do not carry prepayment penalties. This ensures that borrowers are not unfairly restricted in their choices and have options that offer greater flexibility without the additional cost of penalties for paying off their loans early. This provision promotes competition among lenders and provides borrowers with alternatives, which can be particularly important in managing their financial obligations. Offering similar products without penalties helps protect consumers and ensures that they are not at a disadvantage in the mortgage market.

The other possible requirements do not align with Rhode Island mortgage law. For instance, imposing a strict cap on penalties or making prepayment penalties mandatory for every loan would limit consumer choice unnecessarily and could hinder the ability of borrowers to secure favorable loan terms.