Finance
A Montana lender who engages in 'predatory lending' practices may violate which laws?
AOnly state law, not federal law
BTILA, RESPA, ECOA, and state lending laws, as well as the Dodd-Frank Act consumer protection provisions✓ Correct
COnly the Montana Residential Mortgage Loan Act
DOnly common law fraud principles
Explanation
Predatory lending may violate multiple federal laws (TILA, RESPA, ECOA, Dodd-Frank) and state lending laws. Predatory practices include excessive fees, deceptive terms, and targeting vulnerable borrowers.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
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