Dodd-Frank | Prepayment Penalty Q

[Vitamin Gee]

Hello,

I have a question about Dodd Frank and the application of a prepayment penalty.

I’m selling a condo for 305k.

Buyer is:

• Putting putting 30k down;
• Getting 130k mortgage with bank and;
• I'm dong seller financing for the remaining 145k

Buyer will pay $2000 per month with a balloon payment at the end of 5 years of approximately 52k. Total interest for the note is ~25k

To protect my potential gains, both myself (Seller) and Buyer agree that any early payoff in the first 3 years, Buyer will pay Seller all remaining interest had the loan fully amortized to 5 years.

From 3 to 5 years, if the Buyer does early payoff, Seller and Buyer will split the remaining interest had the note matured fully to 5 years.

I just received this from the attorney who’s writing up the contract:

"Mr. [my last name]:

Under the federal Dodd-Frank law, you cannot require a prepayment penalty on a loan like this. If you wanted to require a prepayment penalty, you would need to register as a “lender” with the Consumer Finance Protection Board. I am confident you do not want to do that.

All of this is explained in the Seller Financing Addendum to the Contract.

If you have any questions, I would urge you to contact your personal attorney."

So the question is, anyway around this? Again, both Buyer and Seller agree to the aforementioned terms about early payoff penalty (bolded text).  

Thanks!