                                 CODE OF VIRGINIA

PREPAYMENT BY BORROWER FROM ASSOCIATION; REBATES FOR UNEARNED INTEREST;
PREPAYMENT PENALTY (§ 6.2-1409)

A. Any individual borrowing from an association shall have the right to
anticipate payment of his debt at any time.

B. If interest has been added to the face amount of the note, the borrower shall
have the right, upon prepayment of the debt, to receive a rebate by way of
credit for any unearned interest. The rebate shall be computed:

   1. On loans (i) with an initial maturity and corresponding amortization period
   of 61 months or less and (ii) payable in equal periodic installments, in
   accordance with the Rule of 78 as illustrated in &#xA7; 6.2-403 or by using
   any other method that is at least as favorable to such borrower; and

   2. On other loans, under a method at least as favorable to the borrower as the
   actuarial method.

C. An association may charge a prepayment penalty not to exceed two percent of
the amount of the prepayment, provided such prepayment penalty, including the
percent thereof, is set forth in the contract of indebtedness and is disclosed
to the borrower pursuant to applicable federal interest disclosure laws.

HISTORY: 1987, c. 622, § 6.1-330.84; 1990, c. 338; 1991, c. 171; 2010, c. 794.