Finance
In New York, a lender who charges a borrower an interest rate above a certain threshold on a home loan may be issuing a 'high-cost mortgage' subject to additional protections under:
AThe New York Banking Law and HOEPA (the federal Home Ownership and Equity Protection Act)✓ Correct
BOnly the federal Truth in Lending Act (TILA)
COnly the New York Usury Law
DRESPA only
Explanation
High-cost mortgage loans in New York are regulated by both HOEPA (Home Ownership and Equity Protection Act, a federal law) and New York Banking Law. These laws impose additional disclosure requirements, prohibit certain loan terms (prepayment penalties, balloon payments in some cases), and require pre-loan counseling for covered loans to protect borrowers from predatory lending.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
State-Specific Concepts
Disclosure Requirements
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