- Official section
- National IV: Financing
- Broker weight
- 10% of the national broker portion
- Expected scored items
- Financing accounts for about 10 of 100 items
Illinois exam glossary
Prepayment penalty
A penalty question is never solved by finding one percentage. First ask whether the loan is allowed to contain the term. Then identify federal and Illinois limits, the payoff event, the year, and the correct amount base. Only after those gates do you calculate a charge.
Last updated: August 1, 2026
What does this exam area cover?
Short answer: A prepayment penalty charges the borrower for paying principal before its scheduled due date. Regulation Z permits it on only a narrow fixed-rate, non-higher-priced Qualified Mortgage, requires a no-penalty alternative, caps the charge at 2 percent in years one and two and 1 percent in year three, and prohibits it after three years. Illinois adds creditor and transaction restrictions, including a written alternative offer for covered licensees and no penalty when the secured dwelling is sold or destroyed. The stricter applicable rule governs.
This guide follows the PSI Illinois Candidate Information Booklet effective June 24, 2026, current Regulation Z sections 1026.32 and 1026.43, Fannie Mae and Freddie Mac Form 3200, Illinois Interest Act section 4, Residential Mortgage License Act section 5-8, High Risk Home Loan Act section 30, and Installment Sales Contract Act section 60, all checked through August 1, 2026. Coverage, federal preemption, creditor exemptions, loan purpose, rate, lien, property, high-cost status, and contract date require specific analysis.
What is on the official outline?
- Topic
- Define the charge
- What to know
- principal, early payment, full payoff, partial prepayment, curtailment, refinance, open-end termination, fee, premium, rider, and loan term
- Best exam move
- The charge exists because principal is paid or the plan is ended before its contractual due time.
- Topic
- Read the documents
- What to know
- promissory note, rider, Loan Estimate, Closing Disclosure, payoff statement, mortgage, amendment, modification, penalty period, amount, and event
- Best exam move
- Disclosure identifies the term; the executed credit documents establish the contractual obligation subject to law.
- Topic
- Separate covered mortgage rules
- What to know
- Regulation Z, covered transaction, dwelling, Ability-to-Repay, Qualified Mortgage, fixed rate, higher-priced, APOR, APR, term, and exemption
- Best exam move
- A covered mortgage can contain a penalty only if every section 1026.43(g) gate is satisfied.
- Topic
- Require fixed-rate QM
- What to know
- qualified mortgage, fixed rate, non-higher-priced, APR, average prime offer rate, consummation, balloon, adjustable rate, interest-only, negative amortization, and eligibility
- Best exam move
- An ARM or higher-priced covered transaction fails the federal permission test.
- Topic
- Apply federal duration
- What to know
- first year, second year, third year, 36 months, consummation, anniversary, incurred, prohibited after period, shorter contract, and payoff date
- Best exam move
- No federal section 1026.43(g) penalty can apply after the three-year period.
- Topic
- Apply federal amount
- What to know
- outstanding loan balance prepaid, 2%, 2%, 1%, partial prepayment, full payoff, contract cap, lower amount, calculation, and refund
- Best exam move
- Use the amount of outstanding balance prepaid, not original principal, for the federal calculation.
- Topic
- Offer an alternative
- What to know
- no penalty, fixed APR, same loan type, creditor portfolio, mortgage broker, established business relationship, creditor options, good faith, and consumer choice
- Best exam move
- A creditor cannot offer the penalty loan without also presenting a qualifying fixed-rate no-penalty alternative.
- Topic
- Prohibit high-cost penalties
- What to know
- HOEPA, high-cost mortgage, principal dwelling, APR trigger, points-and-fees trigger, penalty trigger, more than 36 months, more than 2%, and prohibition
- Best exam move
- Once the transaction is a high-cost mortgage, Regulation Z prohibits the penalty.
- Topic
- Apply Illinois licensee offer
- What to know
- 205 ILCS 635/5-8, licensee, no-penalty loan, written offer, borrower initials, decline, rate discount, disclosure, mortgage loan, and arrangement
- Best exam move
- The covered licensee documents both the alternative and the pricing benefit offered for accepting the penalty.
- Topic
- Apply Illinois ceiling
- What to know
- 3%, 2%, 1%, total loan amount, first 12 months, second 12 months, third 12 months, fixed-rate period, first adjustment date, and three years
- Best exam move
- State ceiling does not override a lower federal ceiling; use the stricter applicable result.
- Topic
- Protect sale or destruction
- What to know
- Illinois, residential mortgage loan, dwelling, sale, destruction, insurance proceeds, payoff, prohibited penalty, closing, and title transfer
- Best exam move
- Section 5-8 bars the penalty when prepayment is connected with sale or destruction of the secured dwelling.
- Topic
- Apply Illinois interest rule
- What to know
- 815 ILCS 205/4, residential real estate, mortgage, installment purchase, interest above 8%, exceptions, prepayment charge, interest after payoff, daily interest, and scope
- Best exam move
- Illinois Interest Act restrictions add another screen and cannot be reduced to a universal one-line rule because listed loan categories are excepted.
- Topic
- Protect installment buyers
- What to know
- 765 ILCS 67/60, installment sales contract, covered seller, outstanding principal, scheduled payment date, similar fee, finance charge, and prohibition
- Best exam move
- A covered Illinois installment-contract seller may not collect a prepayment penalty or similar charge.
- Topic
- Distinguish excluded charges
- What to know
- payoff statement, reconveyance, release document, recording fee, lien satisfaction, charged on every payoff, bona fide third-party waiver, guarantee fee, and minimum finance charge
- Best exam move
- A fee imposed regardless of whether payoff is early is not necessarily a prepayment penalty under the federal definition.
- Topic
- Handle waived costs
- What to know
- bona fide third-party charge, creditor waiver, recapture, 36 months, amount waived, excess recapture, prepayment penalty definition, and closing-cost loan
- Best exam move
- Recapture of the exact waived bona fide third-party cost can fit the exception; excess recapture can be a penalty.
- Topic
- Separate voluntary and default payoff
- What to know
- borrower prepayment, acceleration, foreclosure, default, maturity, refinance, sale, destruction, insurance, condemnation, and contract trigger
- Best exam move
- A default acceleration is not automatically the same event as borrower-elected prepayment.
- Topic
- Disclose the term
- What to know
- Loan Estimate, Loan Terms, yes or no, maximum amount, timing, Closing Disclosure, corrected form, added penalty, new three-day wait, note, and rider
- Best exam move
- Adding a penalty after the initial Closing Disclosure restarts the TRID waiting period.
- Topic
- Calculate the payoff
- What to know
- principal, daily interest, escrow balance, release fee, late charge, authorized advance, penalty base, percentage, payoff date, expiration, and written quote
- Best exam move
- Compute the lawful penalty separately from interest and other payoff components.
- Topic
- Compare loan offers
- What to know
- interest rate, APR, points, lender credit, penalty, likely holding period, refinance, sale, total cost, monthly payment, and break-even
- Best exam move
- A lower rate can cost more when a likely early payoff triggers a valid charge.
- Topic
- Protect the closing
- What to know
- seller mortgage, payoff letter, sale exception, title company, lender, quote expiration, per diem, release, disputed fee, attorney, and timely request
- Best exam move
- A broker obtains the payoff issue early and sends enforceability disputes to lender, title, and legal professionals.
Which distinctions produce the most mistakes?
- Terms
- Prepayment penalty vs. interest
- Difference
- Interest compensates for use of principal through the payoff date. A penalty adds a charge because principal is paid early.
- Question cue
- Time cost versus early-exit charge.
- Terms
- Prepayment penalty vs. late charge
- Difference
- A prepayment penalty responds to early principal payment. A late charge responds to an overdue installment.
- Question cue
- Too early versus too late.
- Terms
- Prepayment penalty vs. acceleration
- Difference
- A penalty charges for borrower early payment. Acceleration is the creditor's remedy making the full debt due after default or another trigger.
- Question cue
- Voluntary payoff cost versus default remedy.
- Terms
- Penalty vs. payoff-statement fee
- Difference
- A penalty exists because payoff is early. A bona fide document fee imposed on every payoff can fall outside the federal definition.
- Question cue
- Early-payment condition versus administrative document.
- Terms
- Soft vs. hard penalty
- Difference
- Industry usage calls a penalty soft when a sale is exempt but refinance can trigger it, and hard when both can trigger it. Governing documents and law control, not the label.
- Question cue
- Event-limited versus broader trigger.
- Terms
- Full vs. partial prepayment
- Difference
- Full prepayment retires the debt. Partial prepayment reduces principal while the loan continues.
- Question cue
- Payoff versus curtailment.
- Terms
- Federal 2%-2%-1% vs. Illinois 3%-2%-1%
- Difference
- Federal limits use outstanding balance prepaid for a narrow covered mortgage. Illinois section 5-8 states total-loan-amount ceilings for covered licensees.
- Question cue
- Apply both and use the stricter result.
- Terms
- Original loan amount vs. outstanding balance
- Difference
- Original amount is principal at origination. Outstanding balance is principal remaining when prepayment occurs.
- Question cue
- Illinois and federal formulas can use different bases.
- Terms
- Penalty period vs. loan term
- Difference
- The penalty period is the limited early window in which a charge may apply. The loan term runs to scheduled maturity.
- Question cue
- Early years versus full amortization horizon.
- Terms
- No-penalty alternative vs. same loan approval
- Difference
- The creditor must offer a qualifying alternative under applicable rules. Its rate and costs can differ, and underwriting still applies.
- Question cue
- Required choice versus identical price.
- Terms
- High-cost mortgage vs. higher-priced mortgage
- Difference
- High-cost status follows HOEPA triggers and bans penalties. Higher-priced status follows a separate APR threshold and also prevents the federal QM penalty permission.
- Question cue
- Two distinct Regulation Z categories.
- Terms
- Disclosure vs. enforceability
- Difference
- Disclosure tells the borrower the stated term. Enforceability depends on the contract and every applicable federal and state restriction.
- Question cue
- Term revealed versus term legally collectible.
The P-R-E-P-A-Y check
- Pinpoint the charge: identify whether it arises from full payoff, partial principal, refinance, sale, destruction, open-end termination, or default acceleration.
- Read the credit documents: find the exact period, percentage, amount base, exemptions, note, rider, and disclosures.
- Establish federal permission: confirm coverage, fixed-rate QM status, non-higher-priced status, alternative offer, three-year limit, and 2%-2%-1% ceiling.
- Place Illinois limits: identify licensee status, written alternative, rate discount, 3%-2%-1% ceiling, sale or destruction, Interest Act, high-risk loan, and installment contract.
- Apply the stricter rule: a contract can use a lower charge or shorter period but cannot exceed controlling law.
- Yield the calculation: use the correct balance, year, event, and percentage, then separate penalty from interest, fees, escrow, and payoff adjustments.
- Rule
- Federal year 1
- Period and ceiling
- Maximum 2%
- Amount base
- Outstanding balance prepaid
- Rule
- Federal year 2
- Period and ceiling
- Maximum 2%
- Amount base
- Outstanding balance prepaid
- Rule
- Federal year 3
- Period and ceiling
- Maximum 1%
- Amount base
- Outstanding balance prepaid
- Rule
- Federal after year 3
- Period and ceiling
- Prohibited
- Amount base
- Not applicable
- Rule
- Illinois licensee years 1, 2, 3
- Period and ceiling
- Stated 3%, 2%, 1% ceilings
- Amount base
- Total loan amount
- Rule
- Illinois dwelling sale or destruction
- Period and ceiling
- Prohibited
- Amount base
- Not applicable
How do the rules work in scenarios?
Federal first-year ceiling
Scenario: A qualifying covered mortgage permits the maximum federal penalty. The borrower prepays a $280,000 outstanding balance in year one.
- Year one uses a federal maximum of 2 percent.
- $280,000 times 0.02 equals $5,600.
- Any lower contract or state limit would reduce that result.
Answer: The federal ceiling is $5,600 before applying stricter law.
Federal third-year ceiling
Scenario: A lawful penalty loan has $240,000 outstanding when the borrower prepays the full balance during year three.
- The third-year federal percentage is 1 percent.
- $240,000 times 0.01 equals $2,400.
- The charge must also fit the note and Illinois law.
Answer: The federal ceiling is $2,400.
No penalty after three years
Scenario: A covered mortgage purports to charge 1 percent when the borrower prepays 42 months after consummation.
- Forty-two months falls after the federal three-year period.
- Section 1026.43(g) does not permit the penalty then.
- Contract wording cannot extend the federal maximum period.
Answer: The prepayment penalty is prohibited under the federal covered-mortgage rule.
Illinois sale payoff
Scenario: An Illinois homeowner sells the dwelling in month 18, and the licensed lender's rider states a second-year penalty.
- The payoff is connected with sale of the secured dwelling.
- Section 205 ILCS 635/5-8(c) prohibits a penalty for that event.
- The percentage in the rider does not override the state prohibition.
Answer: The licensee may not collect the prepayment penalty on the stated sale payoff.
ARM fails federal permission
Scenario: A covered adjustable-rate mortgage includes a two-year prepayment penalty and otherwise has affordable terms.
- Section 1026.43(g) permits a penalty only for a fixed-rate covered transaction meeting its other tests.
- An adjustable-rate loan fails that threshold condition.
- A short duration alone does not make the term lawful.
Answer: The covered ARM cannot include the prepayment penalty under the federal rule.
Compare rate concession
Scenario: One mortgage has no penalty at 6.50 percent. Another offers 6.25 percent with a lawful two-year penalty, and the buyer expects to sell in 14 months.
- The lower note rate can reduce monthly interest cost.
- The expected sale can trigger state or contract consequences, though Illinois section 5-8 prohibits a licensee penalty connected with dwelling sale.
- The buyer should compare full projected cost and written enforceability rather than select by rate alone.
Answer: Use the likely payoff event and all governing rules before valuing the rate discount.
Waived cost and excess recapture
Scenario: A creditor waives $3,000 of bona fide third-party costs but requires $4,500 if the consumer prepays in 24 months.
- The federal definition can exclude recapture of the exact $3,000 waived bona fide third-party amount.
- The additional $1,500 is not recapture of that actual cost.
- The excess is a prepayment penalty subject to applicable restrictions.
Answer: $1,500 is treated as a prepayment penalty under the stated federal example.
What are the common exam traps?
- Trap
- Calling any payoff fee a prepayment penalty
- Correction
- A bona fide fee imposed on every payoff for documents or lien release can fall outside the definition.
- Trap
- Calling interest through payoff a penalty
- Correction
- Interest compensates for principal use through the lawful payoff date; a penalty is an extra early-payment charge.
- Trap
- Saying every mortgage may contain a penalty
- Correction
- Federal covered-mortgage permission is limited to a fixed-rate, non-higher-priced QM meeting all conditions.
- Trap
- Allowing a penalty on an ARM
- Correction
- A covered ARM fails the fixed-rate requirement in section 1026.43(g).
- Trap
- Allowing a penalty on a high-cost mortgage
- Correction
- Regulation Z prohibits it.
- Trap
- Extending the federal penalty beyond three years
- Correction
- The permitted period ends after year three.
- Trap
- Using 3% for the federal first year
- Correction
- Federal section 1026.43(g) uses 2 percent; 3 percent appears in the separate Illinois licensee ceiling.
- Trap
- Using original principal for the federal calculation
- Correction
- Federal percentage applies to the outstanding loan balance prepaid.
- Trap
- Ignoring the no-penalty alternative
- Correction
- Federal and Illinois rules require applicable alternative-offer steps before the penalty loan.
- Trap
- Charging an Illinois penalty on sale of the dwelling
- Correction
- Section 205 ILCS 635/5-8 prohibits it for covered licensees.
- Trap
- Applying the Illinois licensee rule to every private person
- Correction
- Confirm the actor and statutory scope before applying section 5-8.
- Trap
- Allowing a covered installment seller to charge the fee
- Correction
- 765 ILCS 67/60 prohibits a prepayment penalty or similar charge on the covered contract.
- Trap
- Treating disclosure as proof of legality
- Correction
- A disclosed term can still be prohibited or unenforceable under federal or state law.
- Trap
- Forgetting the TRID restart
- Correction
- Adding a penalty after the initial Closing Disclosure requires a corrected form and new three-day wait.
- Trap
- Letting a broker calculate a live disputed payoff
- Correction
- Obtain the creditor's written quote and route enforceability disputes to title and legal professionals.
Can you answer these original practice questions?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. What is a prepayment penalty?
- A charge for paying principal before it is due
- A fee for paying late
- Property tax interest
- A brokerage commission
Show answer and explanation
Answer: A charge for paying principal before it is due
The term can cover full or partial prepayment under the agreement and law.
2. Which covered mortgage can potentially contain a federal prepayment penalty?
- A fixed-rate, non-higher-priced Qualified Mortgage meeting all other conditions
- Any adjustable-rate mortgage
- Any high-cost mortgage
- Any negative-amortization loan
Show answer and explanation
Answer: A fixed-rate, non-higher-priced Qualified Mortgage meeting all other conditions
The creditor must also make the required no-penalty alternative offer.
3. What is the maximum federal percentage in year one?
- 1%
- 2%
- 3%
- 5%
Show answer and explanation
Answer: 2%
The percentage applies to outstanding balance prepaid.
4. What is the maximum federal percentage in year three?
- 1%
- 2%
- 3%
- No limit
Show answer and explanation
Answer: 1%
No penalty is permitted after the three-year period.
5. Can a high-cost mortgage include a prepayment penalty?
- No
- Yes
- Only for one year
- Only in Illinois
Show answer and explanation
Answer: No
Regulation Z section 1026.32(d) prohibits it.
6. What must a creditor offer with a covered penalty mortgage?
- A qualifying fixed-rate alternative without a penalty
- A higher penalty loan only
- A cash purchase
- A home warranty
Show answer and explanation
Answer: A qualifying fixed-rate alternative without a penalty
The alternative-offer conditions protect meaningful consumer choice.
7. What does Illinois section 205 ILCS 635/5-8 prohibit?
- A penalty connected with sale or destruction of the secured dwelling
- Every payoff statement fee
- All mortgage interest
- All partial principal payments
Show answer and explanation
Answer: A penalty connected with sale or destruction of the secured dwelling
The section applies to covered residential mortgage licensees and transactions.
8. A lawful federal penalty loan has $200,000 outstanding in year two. What is the federal ceiling?
- $2,000
- $4,000
- $6,000
- $10,000
Show answer and explanation
Answer: $4,000
$200,000 times 2 percent equals $4,000 before stricter contract or state limits.
9. Does the standard Fannie Mae and Freddie Mac fixed-rate note impose a prepayment charge?
- No
- Yes, always 2%
- Yes, always 3%
- Only after maturity
Show answer and explanation
Answer: No
Current Form 3200 permits full or partial principal prepayment without a charge.
10. What happens if a prepayment penalty is added after the initial Closing Disclosure?
- A corrected disclosure and new three-business-day waiting period are required
- Nothing
- The appraisal is canceled
- The deed automatically records
Show answer and explanation
Answer: A corrected disclosure and new three-business-day waiting period are required
An added prepayment penalty is one of TRID's three restart events.
How should you study this area?
- Session
- Session 1
- Focus
- Define and classify charges
- Proof you are ready
- Sort 35 penalty, interest, late charge, payoff statement, release, waived-cost recapture, guarantee, curtailment, and acceleration scenarios.
- Session
- Session 2
- Focus
- Apply federal gates
- Proof you are ready
- Audit 30 fixed, ARM, QM, higher-priced, high-cost, three-year, alternative-offer, and creditor-portfolio facts.
- Session
- Session 3
- Focus
- Calculate 2%-2%-1%
- Proof you are ready
- Solve 30 full and partial prepayments using outstanding balances, anniversary dates, lower contract caps, and expiration.
- Session
- Session 4
- Focus
- Apply Illinois layers
- Proof you are ready
- Review 30 licensee, written-offer, rate-discount, 3%-2%-1%, sale, destruction, Interest Act, high-risk, and installment-contract scenarios.
- Session
- Session 5
- Focus
- Read disclosures and payoff
- Proof you are ready
- Reconcile the Loan Estimate, Closing Disclosure, note, rider, payoff statement, per diem, escrow, release, and penalty in two files.
- Session
- Session 6
- Focus
- Run P-R-E-P-A-Y
- Proof you are ready
- Audit two Illinois payoff scenarios, score at least 90 percent, and explain every missed distractor aloud.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about Prepayment Penalty: Illinois Real Estate Exam Guide
What is a prepayment penalty?
A prepayment penalty is a charge imposed because a borrower pays all or part of loan principal before it is due. The charge can apply to a full payoff, a large principal curtailment, refinance, or termination of an open-end plan, depending on the agreement and law. An ordinary payoff statement or lien-release fee charged regardless of early payment is not automatically a penalty.
Why would a lender charge a prepayment penalty?
A lender can use the charge to offset expected interest or origination economics lost when a loan pays off early. The borrower may receive a pricing concession, such as a lower rate, in exchange. That business reason does not override federal or Illinois restrictions. The penalty must be permitted, disclosed, calculated correctly, and enforceable for the specific creditor, loan, event, and year.
Are prepayment penalties allowed on residential mortgages?
Only in limited circumstances. Regulation Z allows a penalty on a covered mortgage only when the transaction is a fixed-rate Qualified Mortgage that is not higher-priced and the other conditions are met. Federal law bans the charge after three years and caps it at 2 percent in each of the first two years and 1 percent in the third. State law can be stricter.
What mortgage must be offered with no prepayment penalty?
Before a creditor offers a covered transaction with a penalty, Regulation Z requires an alternative covered transaction without one and with an APR that cannot increase after consummation. Additional conditions govern creditor portfolio offers and mortgage-broker transactions. Illinois section 205 ILCS 635/5-8 also requires a licensed lender to make a written no-penalty offer and obtain the borrower's initials declining it.
What are the federal 2%-2%-1% limits?
For the narrow covered mortgage class allowed to contain a penalty, Regulation Z limits the charge to 2 percent of the outstanding loan balance prepaid during the first year, 2 percent during the second year, and 1 percent during the third year. It cannot apply after the three-year period following consummation. A contract can impose a shorter period or lower amount.
What are Illinois' 3%-2%-1% limits?
For a licensee governed by 205 ILCS 635/5-8 after the borrower declines the required written alternative, the state section states ceilings of 3 percent of total loan amount in the first 12-month period, 2 percent in the second, and 1 percent in the third if the fixed period extends three years. Federal law may impose the lower 2%-2%-1% ceiling or prohibit the term entirely.
Can an Illinois lender charge a penalty when the home is sold?
Section 205 ILCS 635/5-8 prohibits a prepayment penalty in connection with the sale or destruction of a dwelling securing a residential mortgage loan. That restriction is an important Illinois exam distinction. A refinance or voluntary curtailment is not automatically the same event, and other state and federal rules still have to be applied.
Can a high-cost mortgage include a prepayment penalty?
No. Regulation Z prohibits a prepayment penalty on a high-cost mortgage. A principal-dwelling loan can itself enter the federal high-cost category if its contract permits a penalty more than 36 months after consummation or account opening, or total penalties exceeding 2 percent of the amount prepaid. Other APR or points-and-fees triggers can also create high-cost status.
Do Fannie Mae and Freddie Mac standard notes charge a prepayment penalty?
The current Multistate Fixed Rate Note Form 3200 states that the borrower may make full or partial principal prepayments without a prepayment charge. Always read the executed note and riders, since an exam may describe a different lawful loan. Do not assume the standard conventional note proves that every mortgage in the market is penalty-free.
Where is a prepayment penalty disclosed?
For a TRID loan, the Loan Estimate and Closing Disclosure state whether the loan has a prepayment penalty and describe the maximum amount and period when applicable. The note or rider creates the contractual term. An added prepayment penalty after the initial Closing Disclosure is one of the three changes that requires a corrected disclosure and a new three-business-day waiting period.
Are these official PSI questions or payoff advice?
No. The questions are original. Primary federal and Illinois sources were checked through August 1, 2026. This is exam education, not a payoff quote, enforceability opinion, lending decision, consumer claim, or legal advice. A live file requires the executed note, rider, disclosures, creditor status, loan type, payoff event, dates, and all applicable federal and state law.
Primary sources
- PSI Illinois Candidate Information Booklet effective June 24, 2026
- Consumer Financial Protection Bureau, current Regulation Z section 1026.43(g) mortgage prepayment-penalty limits and alternative offers
- Consumer Financial Protection Bureau, current Regulation Z section 1026.32 prepayment-penalty definition and high-cost prohibition
- Consumer Financial Protection Bureau, current Regulation Z section 1026.37 Loan Estimate penalty disclosure
- Consumer Financial Protection Bureau, current Regulation Z section 1026.38 Closing Disclosure penalty terms
- Fannie Mae and Freddie Mac Multistate Fixed Rate Note Form 3200, July 2021 prepayment provision
- Illinois General Assembly, 205 ILCS 635/5-8 residential mortgage licensee prepayment rules
- Illinois General Assembly, 815 ILCS 205/4 residential mortgage prepayment and post-payoff interest rules
- Illinois General Assembly, 815 ILCS 137/30 High Risk Home Loan Act penalty restrictions
- Illinois General Assembly, 765 ILCS 67/60 installment sales contract prepayment prohibition
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.