Conditions for Applicability:

1. Loan is Funded by UHM

2. Payment is made immediately
3. Immediately is contemplated as- Within 160 days from the date of the first
payment the entire loan is paid

Consequences:
1. TPO shall reimburse UHMC the amount of any compensation paid to TPO by
UHMC in connection with the Loan, less the amount of any prepayment penalty
actually collected by UHMC or its designee in connection with the payment in full of
the Loan.

2. TPO shall reimburse UHMC within ten (10) days after notice of early payoff.

WHAT IS BASICALLY MEANS:

Third party Originator will pay back the compensation he received from UHMC minus
the amount of prepayment penalty that may be charged by UHMC.

An example of a prepayment penalty:

$500,000 loan amount

Interest rate of 6.5%
Monthly mortgage payment of $2,708.33
6 monthly payments = $16,249.99
80% of those 6 monthly payments = $13,000.00

WHY THE PENALTY?

Prepayment penalties were devised to protect lenders and investors that rely on
years and years of lucrative interest payments to make money.
When loans are paid off quickly, regardless of whether by refinance or a sale, less
money than originally anticipated will be made. Its a simple concept.
The mortgage is extended with the belief that a certain amount of interest will be
collected. If, in reality, much less is realized, the holders of these mortgages wont
profit as they originally expected. So its clearly less desirable for those who hold the
loan.This is essentially a way for those with an interest in your mortgage to ensure
they get something back, regardless of how long the mortgage is kept before being
paid off.

Governing Law:
Ohio Law

Definitions from the Ohio Code and recent changes:

Prepayment penalty- (M) "Prepayment penalty" means a charge for prepayment
of a loan at any time prior to five years from the date the loan contract is executed.
(OHIO CODE 1321.51)

LOAN PREPAYMENT PENALTY/ADJUSTMENT BASED ON THE ANNUAL

PERCENTAGE CHANGE IN THE CONSUMER PRICE INDEX (CPI) Revised Code
1343.011(C) (2) (b) Effective January 1, 2017
 No penalties may be imposed on prepayment or refinancing of a
residential mortgage loan of less than $88,503, effective January 1,
2017. Revised Code 1343.011(C) (2) (a), effective as of January 1, 2007,
states that no penalty may be charged for the prepayment or refinancing of a
residential mortgage obligation of less than $75,000 that is made or arranged
by a mortgage broker, loan officer, or non-bank mortgage lender, as those
terms are defined in section 1345.01 of the Revised Code, and that is secured
by a mortgage on a borrowers real estate that is a first lien on the real
estate.

Further, Revised Code 1343.011(C) (2) (b) states that the loan amount limit is
to be adjusted annually on January 1st by the annual percentage change in
the Consumer Price Index (CPI) for all urban consumers, Midwest Region, all
items, the Consumer Price Index as reported on June 1st of the year
preceding the adjustment.
During the period of June 1, 2015 to June 1, 2016 the CPI increased by
0.8329%

Prepayment penalty which may be imposed in OH.

Possible Actions to Do which can Protect Us:

1. Is the loan type subject to a Right of Rescission? (This should be the last
resort because the client may not want to pursue this.)
2. Find out what is the trigger point in every loan done. (Your client can pay a
certain % of the loan for the year without triggering the penalty.)
3. Advise the client NOT TO ACCEPT THE EARLY PAY OFF PENALTY. (No matter
how bad the clients credit is , they have this option. Their interest rate will
be higher, or they will charge the client more for the loan, but they won't
have a prepayment penalty.)
4. Wait to sell or refinance until the prepayment penalty has expired. (160 days)
5. Advise the client to refinance with the same company.