Finance
In Texas, a 'prepayment penalty' on a mortgage loan:
AIs required by state law on all loans over $100,000
BMay be charged on some loan types but is prohibited on certain federally related loans and restricted on qualified mortgages✓ Correct
CMust be disclosed only if it exceeds 2% of the loan amount
DIs set by TREC for all residential loans
Explanation
Prepayment penalties on Qualified Mortgages (QMs) are generally prohibited or heavily restricted. Federal regulations limit prepayment penalties on certain loan types. VA and FHA loans do not have prepayment penalties. Texas law provides additional restrictions. All prepayment penalty terms must be disclosed to borrowers.
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