"Any 14-year-old can fill out these documents; they're administrative at best," he told the conference. "The question is, do you need to be a lawyer?" So far, the results on this question have been mixed, but litigation is ongoing in several states.

Statutory provisions on such sanctions run the gamut from absolute prohibitions to limits on the amount, but there are cases pending in several states in which borrowers contend that the rules as set forth in their loan documents have been breached.

"Safeguards and due diligence procedures need to be in place to insure that proper checks and balances are in place to determine whether prepayment penalties are part of the loan," the Minneapolis attorney cautioned lenders.

Two such cases are pending in Minnesota, which allows early payment of home mortgages without penalty.

Though "there is very little case law of this as yet," Pratte said the cases strike him as "kinda silly." Nevertheless, he warned lenders that the issue illustrates the new and creative ways in which lawyers for the other side are to attack them.

While almost any charge is susceptible to scrutiny, he added, "any fee for ending a loan" is particularly vulnerable in states that prohibit prepay fines.

The issue, he said, is whether the fees are disclosed to the debtor. In two cases in which they were not, the bankruptcy judge levied rather severe financial sanctions against the lenders involved. But in another case, the judge granted summary judgement because the charges had been revealed.

"If you don't disclose," Pratte advised the lenders, "it could get ugly."