Which of the following loan features was specifically targeted by the Dodd-Frank Act's 'Ability to Repay' rule?
Why No-doc, stated-income, and negative amortization loans with no ability-to-repay verification Is Correct
Answer B: No-doc, stated-income, and negative amortization loans with no ability-to-repay verification
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
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Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
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
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