Finance
A Louisiana mortgage lender may not charge a prepayment penalty on certain residential loans under federal law because:
APrepayment penalties are always illegal
BQualified Mortgage (QM) rules under the Dodd-Frank Act prohibit prepayment penalties on most residential QM loans after a certain period✓ Correct
CThe LREC prohibits prepayment penalties
DPrepayment penalties are only allowed on commercial loans in Louisiana
Explanation
The CFPB's Qualified Mortgage rules generally prohibit prepayment penalties on most residential QM loans, or significantly limit them. Prepayment penalties that penalize borrowers for paying off loans early are considered harmful to consumers.
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