Finance
Under Alaska lending law, a 'usury' violation occurs when a lender charges:
AAn origination fee greater than 1%
BAn interest rate above the legal maximum allowed by state law✓ Correct
CMore than 3 points on a mortgage
DA variable rate without proper disclosure
Explanation
Usury is the practice of charging interest at a rate above the legal maximum set by state law. Alaska's usury laws set maximum interest rates for certain types of loans.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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