A lender offers a high-cost mortgage with a balloon payment due in year 7. Under what circumstances would this be permissible under HOEPA?
Correct Answer
A) Never - balloon payments are prohibited on all high-cost mortgages
HOEPA prohibits balloon payments on all high-cost mortgages, regardless of the borrower's assets, loan-to-value ratio, or the size of the balloon payment. This is an absolute prohibition with no exceptions.
Why This Is the Correct Answer
HOEPA prohibits balloon payments on all high-cost mortgages, regardless of the borrower's assets, loan-to-value ratio, or the size of the balloon payment. This is an absolute prohibition with no exceptions.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
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A lender quotes an APR of 4.25% on a mortgage loan, but the actual APR calculation results in 4.28%. Under TILA's APR accuracy tolerance, is this disclosure compliant?
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A lender discovers an error in the APR disclosed on a closed-end mortgage loan after consummation. The disclosed APR was 4.25% but should have been 4.75%. Which action is required under TILA?
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