Michigan prepayment penalty rules

Michigan restricts prepayment penalties on first-lien residential mortgage loans. Under MCL 438.31c(2)(c), a lender may charge a prepayment fee or penalty of no more than 1% of the amount prepaid if made within three years of the loan date, and no prepayment fee or penalty may be charged after three years. However, these restrictions may be preempted for alternative mortgage transactions (e.g., adjustable-rate mortgages) under the Alternative Mortgage Transaction Parity Act (AMTPA), depending on the type of creditor.