Finance
Prepayment penalties on Nebraska home loans are regulated because:
AThey encourage borrowers to pay off loans faster
BThey can trap borrowers in high-rate loans and are limited or prohibited on certain loan types✓ Correct
CThey are required by federal law on all 30-year mortgages
DNebraska has no regulations on prepayment penalties
Explanation
Prepayment penalties restrict a borrower's ability to refinance or pay off a loan early. They are prohibited or limited on certain loan types (e.g., QM loans) to protect consumers from being trapped in high-cost mortgages.
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