FHA Nixes Post-Payment Interest Charges On Mortgages

Law360, New York (August 27, 2014, 7:26 PM EDT) -- The Federal Housing Administration on Tuesday issued its final rule eliminating post-payment interest charges on mortgages paid in full, allowing mortgage lenders to charge interest only through the date a mortgage is paid and not beyond that.

The FHA said that borrowers who prepay FHA-insured mortgages will not have to make interest payments beyond the date their mortgage is paid in full. The rule, called Handling Prepayments: Eliminating Post-Payment Interest Charges, applies for FHA-insured mortgages closed on or after Jan. 21, 2015.  

The rule explicitly prohibits lenders from charging borrowers post settlement interest, which the Consumer Financial Protection Bureau broadly defines...

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