FinanceIntermediateArizona Exam

In Arizona, 'predatory lending' practices that are illegal include:

ARequiring a minimum credit score for all conventional loan applications, since minimum credit requirements disproportionately affect protected class members in predatory ways

BLoan flipping, equity stripping, balloon payment abuse, and charging excessive fees to vulnerable borrowersCorrect

CDeclining loan applications in geographic areas characterized by high default rates, since geographic risk-based underwriting constitutes predatory lending under HUD guidance

DCharging standard origination fees that are fully disclosed on the Loan Estimate, since disclosure alone constitutes predatory lending when fees exceed 3% of the loan amount

Why Loan flipping, equity stripping, balloon payment abuse, and charging excessive fees to vulnerable borrowers Is Correct

Answer B: Loan flipping, equity stripping, balloon payment abuse, and charging excessive fees to vulnerable borrowers

Predatory lending involves deceptive, abusive, or unfair practices targeting vulnerable borrowers—including loan flipping (repeated refinancing with excessive fees), equity stripping, steering to high-cost products, and inflating fees.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

Key Finance Terms in This Question

Steering

An illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.

People Also Study

Key Terms to Know

Steering

An illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.

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.

Pre-Approval

A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.