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Under California's predatory lending restrictions, which of the following loan features would be prohibited on a covered high-cost mortgage loan?

Correct Answer

C) A prepayment penalty that extends beyond 36 months

California's predatory lending law prohibits prepayment penalties that extend beyond 36 months on covered high-cost mortgage loans. Prepayment penalties beyond this period are considered predatory.

Answer Options
A
A 30-year fixed interest rate
B
An escrow account for taxes and insurance
C
A prepayment penalty that extends beyond 36 months
D
A loan-to-value ratio of 80%

Why This Is the Correct Answer

California's predatory lending law prohibits prepayment penalties that extend beyond 36 months on covered high-cost mortgage loans. Prepayment penalties beyond this period are considered predatory.

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