A non-exempt lender writes a $100,000 1-year loan at 9% and also charges 4 points, taking $4,000 at closing. Must the lender include its retained points when evaluating the loan’s effective interest rate?
Correct Answer
C) Test the effective rate: points taken as compensation count toward the yield
Points and charges retained by the lender as compensation for the loan are counted in working out the effective rate, so 9 percent plus $4,000 on a one-year term is tested rather than assumed safe. Other choices: the nominal rate is not the whole answer; calling points a service fee is the argument the doctrine looks through; and points are not automatically fatal. Source: California usury doctrine; effective rate
Why This Is the Correct Answer
Points and charges retained by the lender as compensation for the loan are counted in working out the effective rate, so 9 percent plus $4,000 on a one-year term is tested rather than assumed safe. Other choices: the nominal rate is not the whole answer; calling points a service fee is the argument the doctrine looks through; and points are not automatically fatal. Source: California usury doctrine; effective rate
More UST Questions
A Washington broker provides the federal settlement service estimates and booklet in 2026 and no separate state itemization. Can disclosures compliant with RESPA and Regulation X satisfy the state third-party itemization subsection?
Priya is comparing pre-license education providers before applying for a Florida mortgage loan originator license. How many hours of approved pre-license education must she complete in total?
An applicant is budgeting for a Florida MLO license and asks what the state application fee comes to at filing. Which figure is correct?
A newly sponsored Florida MLO is told she must buy an individual surety bond in her own name before she can originate. Is that correct?
A Washington consumer loan act licensee also brokers loans in 2026 outside the authority of that act. Does the consumer-loan-act exemption extend to mortgage brokerage outside that act’s authority?
A $200,000 Texas home equity loan has $3,700 in fees subject to the constitutional cap and a separate $600 fee for an appraisal performed by a third-party appraiser. Do the capped fees exceed the limit?
An owner applies for a Texas home equity loan on 4 May 2026 and the lender delivers the required notice on 8 May. Which date starts the constitutional 12-day waiting period for closing?
An owner closed a Texas home equity loan on 3 February 2026 and wants a second one on the same homestead in November 2026. Assuming no declared-emergency exception applies and the earlier home equity lien will be paid off, may the new loan close in November?
A Texas home equity loan forecloses and the sale leaves the lender $62,000 short of the balance owed. Absent actual fraud in obtaining the credit, may the lender recover the shortfall personally from the owner or spouse?
A Washington real estate broker helps a 2026 buyer arrange financing and takes only the usual sales commission. Does financing assistance incidental to a bona fide sale for only the customary real-estate commission fall within the exemption?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam