Alabama prepayment penalty rules

Prepayment penalties on residential first-lien mortgage loans are generally prohibited under the Alabama Consumer Credit Act. However, they are permitted in a simple interest transaction with an original amount financed of $2,000 or more if the creditor is exempt from licensing under the Act (e.g., banks) or is a trust institution or exempt trust as described in §5-19-31(a). No specific time limit or cap on the penalty amount is provided in the regulation.