Finance
Under New York's Banking Law, the 'usury' statutes prohibit charging interest rates above the maximum legal rate on:
AAll mortgage loans in New York
BCertain types of loans (particularly consumer loans); however, most mortgage loans in New York are exempt from usury laws or have modified limits✓ Correct
CGovernment-backed FHA and VA loans only
DCommercial loans over $10,000,000
Explanation
New York's usury law (General Obligations Law) caps interest rates on certain consumer loans. However, residential first mortgages and commercial real estate loans are generally exempt from the general usury law, or have modified limits.
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Key Terms to Know
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.
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.
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.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Math Concepts
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