A Texas high-cost home loan schedules a final payment 4 times the average monthly payment, due 42 months after closing. Assuming no statutory exception applies, does this payment comply with the state balloon restriction?
Correct Answer
D) Prohibited under the state rule; absent an exception, this balloon must be due at least 60 months after the loan date
Section 343.202 restricts a scheduled payment exceeding twice the average earlier monthly payments unless due at least 60 months after the loan date, subject to its exceptions. Four times the average at month 42 fails that state test. Initials do not waive it. Separate federal high-cost-mortgage restrictions must also be checked. Source: Tex. Fin. Code sec. 343.202
Why This Is the Correct Answer
Section 343.202 restricts a scheduled payment exceeding twice the average earlier monthly payments unless due at least 60 months after the loan date, subject to its exceptions. Four times the average at month 42 fails that state test. Initials do not waive it. Separate federal high-cost-mortgage restrictions must also be checked. Source: Tex. Fin. Code sec. 343.202
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