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HB 2391

An Act amending the act of January 30, 1974 (P.L.13, No.6), referred to as the Loan Interest and Protection Law, in protective provisions, further providing for prepayment penalty prohibited.

2025-2026 Regular Session Introduced by Scott Conklin and 5 co-sponsors

The bill prohibits prepayment penalties for loans under the Loan Interest and Protection Law, strengthening borrower protections by banning early payoff fees.

Referred to Banking & Insurance
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WeVote Research Nonpartisan
Bill Summary · HB 2391

Summary: Bill HB 2391 (Pennsylvania, 2025-2026)

Overview

  • Title: An Act amending the act of January 30, 1974 (P.L.13, No.6), referred to as the Loan Interest and Protection Law, in protective provisions, further providing for prepayment penalty prohibited.
  • Jurisdiction: Pennsylvania
  • Session: 2025-2026
  • Sponsors: Darisha Parker (co-sponsor), Scott Conklin (co-sponsor), Pat Harkins (co-sponsor), Carol Hill-Evans (co-sponsor), Manny Guzman (co-sponsor)

Purpose and intent

The bill seeks to modify provisions of the Pennsylvania Loan Interest and Protection Law (LIPL) related to protective provisions and, specifically, to prohibit prepayment penalties. In essence, it aims to strengthen protections for borrowers by eliminating charges that lenders may impose when a loan is paid off early.

Key provisions and changes (as proposed)

  • Prepayment penalties prohibited: The bill adds or reinforces a prohibition on prepayment penalties for certain loans governed by the Loan Interest and Protection Law. This means lenders would not be allowed to charge a fee or penalty if a borrower pays down or fully repays a loan earlier than its scheduled maturity.
  • Protective provisions (locations within LIPL): The act amends the sections interpreted as “protective provisions” within the LIPL. While the exact textual changes are not provided here, the emphasis is on aligning protective measures with the prohibition on prepayment penalties and ensuring borrowers have enhanced protections when obtaining or repaying loans.
  • Consistency with current LIPL framework: The amendment appears designed to harmonize the prohibition on prepayment penalties with existing borrower protections under the LIPL, possibly clarifying definitions, enforcement mechanisms, and scope of covered loan types.

Who would be affected

  • Borrowers: Individuals and businesses that use loans within the scope of the Loan Interest and Protection Law would benefit from the prohibition on prepayment penalties, potentially reducing the overall cost of premature payoff.
  • Lenders: Lenders offering loans subject to the LIPL would be restricted from imposing prepayment penalties, affecting permissible loan terms and fees. They may need to adjust product offerings, disclosures, and contract language to comply.
  • Regulatory/Enforcement framework: State regulators enforcing the LIPL would apply the updated provisions, ensuring lenders comply with the ban on prepayment penalties and any accompanying protective provisions.

Procedural and timeline aspects

  • The bill, as introduced or proposed, would go through the standard Pennsylvania legislative process:
    • Introduction and referral to appropriate committees (likely Banking and Insurance, or Intergovernmental Affairs).
    • Committee consideration, including hearings, amendments, and potential votes.
    • Floor consideration by both chambers (House and Senate) and, if passed, reconciliation of any differences.
    • Gubernatorial signature or veto and potential judicial review if challenged.
  • Effective date: Not specified here. Typically, if enacted, the bill would specify when the prohibition on prepayment penalties takes effect (e.g., upon enactment or a future effective date) and whether it applies to loans originated before or after that date.
  • Relation to existing law: The bill amends the Loan Interest and Protection Law, so the changes would be integrated into the current statutory framework governing loan terms, disclosures, interest, and protections for borrowers.

Potential impact and considerations

  • Borrower cost savings: Eliminating prepayment penalties can reduce the total cost of loans for borrowers who wish to repay early.
  • Loan product redesign: Lenders may adjust pricing, fees, or product structures to comply with the new prohibition.
  • Investor and market implications: Changes to permissible terms could influence the availability and structuring of certain loan products in Pennsylvania.
  • Enforcement and compliance: Compliance resources may be needed for lenders to ensure no inadvertent prepayment penalties are charged and to update disclosures and contract templates.

If you’d like, I can compare HB 2391 to current LIPL text to pinpoint exact language changes or provide a fiscal impact analysis once the bill’s fiscal note is released.

Compiled from official sources — confirm details with the bill’s official record.

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