{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/6.2-423.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/6.2-423.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/6.2-423.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/6.2-423.html"}],"law_id":61310,"edition_id":1,"section_id":61310,"structure_id":13385,"section_number":"6.2-423","catch_line":"Prepayment of loans secured by certain subordinate mortgages or deeds of trust; rebates for unearned interest","history":"1987, c. 622, \u00a7 6.1-330.85; 1990, c. 338; 1991, c. 171; 1998, c. 89; 2010, c. 794.","full_text":"A\n\nAny borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of \u00a7 6.2-327, shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan if the prepayment penalty shall not exceed two percent of the principal amount prepaid, but no prepayment penalty shall be imposed if:1\n\nThe loan is refinanced or consolidated with the same lender or a subsequent noteholder;2\n\nThe loan is accelerated due to default;3\n\nA partial prepayment is made; or4\n\nIn the case of an open-end credit plan, as defined in § 6.2-300, where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage.B\n\nIf interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest. On loans with an initial maturity and corresponding amortization period of 61 or fewer months that are payable in equal periodic installments, the rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.2-403. On loans with an initial maturity of more than 61 months, the rebate shall be computed under a method at least as favorable to the borrower as the actuarial method.C\n\nThe provisions of this section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.","order_by":null,"text":{"0":{"id":223998,"text":"Any borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of \u00a7 6.2-327, shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan if the prepayment penalty shall not exceed two percent of the principal amount prepaid, but no prepayment penalty shall be imposed if:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":223999,"text":"The loan is refinanced or consolidated with the same lender or a subsequent noteholder;","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":224000,"text":"The loan is accelerated due to default;","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"A3"},"3":{"id":224001,"text":"A partial prepayment is made; or","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"A4"},"4":{"id":224002,"text":"In the case of an open-end credit plan, as defined in § 6.2-300, where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage.","type":"section","prefixes":["A","4"],"prefix":"4","entire_prefix":"A4","prefix_anchor":"A4","level":2,"prior_prefix":"A3","next_prefix":"B"},"5":{"id":224003,"text":"If interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest. On loans with an initial maturity and corresponding amortization period of 61 or fewer months that are payable in equal periodic installments, the rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.2-403. On loans with an initial maturity of more than 61 months, the rebate shall be computed under a method at least as favorable to the borrower as the actuarial method.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A4","next_prefix":"C"},"6":{"id":224004,"text":"The provisions of this section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B"}},"ancestry":[{"id":13385,"edition_id":1,"name":"Loans Secured by Lien on Real Estate","identifier":"2","label":"article","depth":4,"order_by":1,"parent_id":12854,"metadata":{},"date_created":"2026-06-26 03:44:46","date_modified":"2026-06-26 03:44:46","permalink":{"id":263491,"object_type":"structure","relational_id":13385,"identifier":"2","token":"6.2\/I\/4\/2","url":"\/6.2\/I\/4\/2\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12854,"edition_id":1,"name":"Certain Lending Practices","identifier":"4","label":"chapter","depth":3,"order_by":1,"parent_id":12853,"metadata":{},"date_created":"2026-06-26 03:43:56","date_modified":"2026-06-26 03:43:56","permalink":{"id":263463,"object_type":"structure","relational_id":12854,"identifier":"4","token":"6.2\/I\/4","url":"\/6.2\/I\/4\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12853,"edition_id":1,"name":"General Provisions","identifier":"I","label":"subtitle","depth":2,"order_by":1,"parent_id":12852,"metadata":{},"date_created":"2026-06-26 03:43:56","date_modified":"2026-06-26 03:43:56","permalink":{"id":263251,"object_type":"structure","relational_id":12853,"identifier":"I","token":"6.2\/I","url":"\/6.2\/I\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12852,"edition_id":1,"name":"Financial Institutions and Services","identifier":"6.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:56","date_modified":"2026-06-26 03:43:56","permalink":{"id":263249,"object_type":"structure","relational_id":12852,"identifier":"6.2","token":"6.2","url":"\/6.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":68627,"structure_id":13385,"section_number":"6.2-406","catch_line":"Disclosure of terms of mortgage application","url":"\/6.2-406\/","token":"6.2\/I\/4\/2\/6.2-406","metadata":false},{"id":76659,"structure_id":13385,"section_number":"6.2-407","catch_line":"Lenders to furnish borrower with copy of appraisal","url":"\/6.2-407\/","token":"6.2\/I\/4\/2\/6.2-407","metadata":false},{"id":73416,"structure_id":13385,"section_number":"6.2-408","catch_line":"Priority of interest on debts secured by mortgage or deed of trust","url":"\/6.2-408\/","token":"6.2\/I\/4\/2\/6.2-408","metadata":false},{"id":55630,"structure_id":13385,"section_number":"6.2-409","catch_line":"Addition of unpaid interest to principal balance","url":"\/6.2-409\/","token":"6.2\/I\/4\/2\/6.2-409","metadata":false},{"id":86582,"structure_id":13385,"section_number":"6.2-410","catch_line":"Borrowers not to be required to employ particular professionals","url":"\/6.2-410\/","token":"6.2\/I\/4\/2\/6.2-410","metadata":false},{"id":86576,"structure_id":13385,"section_number":"6.2-411","catch_line":"Requirements relating to insurance","url":"\/6.2-411\/","token":"6.2\/I\/4\/2\/6.2-411","metadata":false},{"id":75246,"structure_id":13385,"section_number":"6.2-412","catch_line":"Insurance coverage under certain loans not to exceed replacement value of improvements","url":"\/6.2-412\/","token":"6.2\/I\/4\/2\/6.2-412","metadata":false},{"id":79804,"structure_id":13385,"section_number":"6.2-413","catch_line":"Obligation of lender to reimburse unused mortgage guaranty insurance premiums","url":"\/6.2-413\/","token":"6.2\/I\/4\/2\/6.2-413","metadata":false},{"id":70580,"structure_id":13385,"section_number":"6.2-414","catch_line":"Obligation of person maintaining escrow account to pay taxes and insurance; penalties","url":"\/6.2-414\/","token":"6.2\/I\/4\/2\/6.2-414","metadata":false},{"id":84302,"structure_id":13385,"section_number":"6.2-415","catch_line":"Lender not to cancel insurance policy at time of refinancing under certain circumstances","url":"\/6.2-415\/","token":"6.2\/I\/4\/2\/6.2-415","metadata":false},{"id":59737,"structure_id":13385,"section_number":"6.2-416","catch_line":"Certain mortgages not to prohibit further encumbrance of real property","url":"\/6.2-416\/","token":"6.2\/I\/4\/2\/6.2-416","metadata":false},{"id":72706,"structure_id":13385,"section_number":"6.2-417","catch_line":"Mortgage or deed of trust to contain notice that debt is subject to call or modification on conveyance of property","url":"\/6.2-417\/","token":"6.2\/I\/4\/2\/6.2-417","metadata":false},{"id":81416,"structure_id":13385,"section_number":"6.2-418","catch_line":"Property owner entitled to written statement of payoff amount","url":"\/6.2-418\/","token":"6.2\/I\/4\/2\/6.2-418","metadata":false},{"id":76947,"structure_id":13385,"section_number":"6.2-419","catch_line":"Disclosure of terms of assumption","url":"\/6.2-419\/","token":"6.2\/I\/4\/2\/6.2-419","metadata":false},{"id":82644,"structure_id":13385,"section_number":"6.2-420","catch_line":"Prepayment penalty not to be collected in certain circumstances","url":"\/6.2-420\/","token":"6.2\/I\/4\/2\/6.2-420","metadata":false},{"id":76124,"structure_id":13385,"section_number":"6.2-421","catch_line":"Certain contracts to permit prepayment; amount of prepayment penalty","url":"\/6.2-421\/","token":"6.2\/I\/4\/2\/6.2-421","metadata":false},{"id":54357,"structure_id":13385,"section_number":"6.2-422","catch_line":"Prepayment penalty for loan secured by home occupied by borrower","url":"\/6.2-422\/","token":"6.2\/I\/4\/2\/6.2-422","metadata":false},{"id":61310,"structure_id":13385,"section_number":"6.2-423","catch_line":"Prepayment of loans secured by certain subordinate mortgages or deeds of trust; rebates for unearned interest","url":"\/6.2-423\/","token":"6.2\/I\/4\/2\/6.2-423","metadata":false}],"previous_section":{"id":54357,"structure_id":13385,"section_number":"6.2-422","catch_line":"Prepayment penalty for loan secured by home occupied by borrower","url":"\/6.2-422\/","token":"6.2\/I\/4\/2\/6.2-422","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/6.2-423\/","history_text":"

This law was first created in 1987. The record of its establishment is cataloged in chapter 622 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1987 \u201cActs\u201d aren\u2019t available online. It has been modified 4 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1990, chapter 338; in 1991, chapter 171; in 1998, chapter 89<\/a>; in 2010, chapter 794<\/a>.<\/p>","references":[{"id":55296,"section_number":"6.2-328","catch_line":"Charges allowed on loan secured by subordinate mortgage","order_by":null,"url":"\/6.2-328\/"},{"id":63347,"section_number":"6.2-405","catch_line":"References to sections regulating rebates of unearned interest and prepayment penalties","order_by":null,"url":"\/6.2-405\/"}],"refers_to":[{"id":61230,"section_number":"6.2-300","catch_line":"Definitions","order_by":null,"url":"\/6.2-300\/"},{"id":66025,"section_number":"6.2-327","catch_line":"Certain loans secured by a subordinate deed of trust or mortgage","order_by":null,"url":"\/6.2-327\/"},{"id":78834,"section_number":"6.2-403","catch_line":"The Rule of 78","order_by":null,"url":"\/6.2-403\/"}],"permalink":{"id":263561,"object_type":"law","relational_id":61310,"identifier":"6.2-423","token":"6.2\/I\/4\/2\/6.2-423","url":"\/6.2-423\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/6.2-423\/","token":"6.2\/I\/4\/2\/6.2-423","dublin_core":{"Title":"Prepayment of loans secured by certain subordinate mortgages or deeds of trust; rebates for unearned interest","Type":"Text","Format":"text\/html","Identifier":"\u00a7 6.2-423","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Any borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of \u00a7 6.2-327<\/a>, shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract<\/span> for a penalty<\/span> for prepayment of the full amount of the loan if the prepayment penalty<\/span> shall not exceed two percent of the principal amount prepaid, but no prepayment penalty<\/span> shall be imposed if: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The loan is refinanced or consolidated with the same lender or a subsequent noteholder; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The loan is accelerated due to default<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> A partial prepayment is made; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> In the case of an open-end credit plan, as defined in § 6.2-300<\/a>, where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> If interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest. On loans with an initial maturity and corresponding amortization period of 61 or fewer months that are payable in equal periodic installments, the rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.2-403<\/a>. On loans with an initial maturity of more than 61 months, the rebate shall be computed under a method at least as favorable to the borrower as the actuarial method. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The provisions of this section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nPREPAYMENT OF LOANS SECURED BY CERTAIN SUBORDINATE MORTGAGES OR DEEDS OF TRUST;\nREBATES FOR UNEARNED INTEREST (\u00a7 6.2-423)\n\nA. Any borrower under any loan secured by a subordinate mortgage or deed of\ntrust on residential real estate, which loan is subject to the provisions of \u00a7\n6.2-327, shall have the right to anticipate payment of his debt in whole or in\npart at any time. If agreed to by the borrower, a lender may contract for a\npenalty for prepayment of the full amount of the loan if the prepayment penalty\nshall not exceed two percent of the principal amount prepaid, but no prepayment\npenalty shall be imposed if:\n\n 1. The loan is refinanced or consolidated with the same lender or a subsequent\n noteholder;\n\n 2. The loan is accelerated due to default;\n\n 3. A partial prepayment is made; or\n\n 4. In the case of an open-end credit plan, as defined in § 6.2-300, where\n there is a payment of the outstanding balance without a demand to release the\n subordinate deed of trust or mortgage.\n\nB. If interest has been added to the face amount of a note payable in\ninstallments, the borrower shall have the right to a rebate of any unearned\ninterest. On loans with an initial maturity and corresponding amortization\nperiod of 61 or fewer months that are payable in equal periodic installments,\nthe rebate shall be computed in accordance with the Rule of 78 as illustrated in\n§ 6.2-403. On loans with an initial maturity of more than 61 months, the\nrebate shall be computed under a method at least as favorable to the borrower as\nthe actuarial method.\n\nC. The provisions of this section shall not apply to any loan made by (i) a\nbank, savings institution, industrial loan association, or credit union or (ii)\na seller in a real estate sales transaction who takes a subordinate mortgage or\ndeed of trust on such real estate.\n\nHISTORY: 1987, c. 622, \u00a7 6.1-330.85; 1990, c. 338; 1991, c. 171; 1998, c. 89;\n2010, c. 794.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}