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.
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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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