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1. Question

A lender originates a high-cost mortgage loan containing a clause requiring the borrower to pay a substantial fee if the loan is paid off early.

Why could this provision violate HOEPA requirements?

A) Prepayment penalties are permitted only for FHA-insured loans
B) Prepayment penalties are banned for high-cost mortgages
C) Prepayment penalties are allowed if disclosed at application
D) High-cost mortgages may contain unlimited prepayment penalties during the first five years

2. Question

A borrower intentionally provides false income documentation during the origination of a high-cost mortgage loan.

Why is acceleration generally permitted?

A) High-cost mortgages may always contain unrestricted due-on-demand clauses
B) Acceleration is permitted when the consumer commits fraud or makes a material misrepresentation in connection with the loan
C) Due-on-demand clauses apply only after foreclosure proceedings begin
D) Federal law prohibits acceleration for fraud-related activity

3. Question

A borrower with a high-cost mortgage stops making required monthly payments for several consecutive months.

Why is acceleration generally permitted?

A) High-cost mortgage acceleration clauses are prohibited in all circumstances
B) Acceleration is permitted only after judicial foreclosure
C) Due-on-demand acceleration is allowed when the consumer defaults on payment
D) Acceleration is permitted only for reverse mortgages

4. Question

A borrower allows hazardous waste contamination to occur on a property securing a high-cost mortgage loan.

Why is acceleration generally permitted?

A) Lenders may accelerate loans whenever property values decline
B) Acceleration is allowed when the consumer’s action or inaction adversely affects the lender’s security interest
C) Environmental issues are exempt from mortgage enforcement provisions
D) Due-on-demand clauses apply only to commercial loans

5. Question

A mortgage broker encourages a borrower who is current on an existing mortgage to intentionally stop making payments in order to qualify for a new high-cost refinance transaction.

Why could this recommendation violate federal regulations?

A) Borrowers may never refinance delinquent loans
B) Creditors and mortgage brokers are prohibited from recommending default on an existing loan to be refinanced by a high-cost mortgage
C) Refinances are prohibited after any late payment history
D) High-cost mortgages are limited to investment properties only

6. Question

A loan servicer charges a borrower a fee to extend and modify the terms of an existing high-cost mortgage loan.

Why could this fee violate federal regulations?

A) Modification fees are prohibited only for FHA-insured loans
B) Creditors, servicers, and assignees cannot charge fees to modify, defer, renew, extend, or amend a high-cost mortgage
C) Loan modifications are prohibited for all high-cost mortgages
D) Modification fees are permitted if disclosed after consummation

7. Question

A borrower with a high-cost mortgage misses a payment and later resumes making payments. The lender charges multiple compounding late fees exceeding four percent of the overdue amount.

Why could these charges violate federal rules?

A) Late fees are completely prohibited for all mortgage loans
B) High-cost mortgage late fees are restricted to four percent of the past due payment and pyramiding of late fees is prohibited
C) Late fees may only be charged after foreclosure begins
D) Pyramiding of fees is permitted if disclosed at closing

8. Question

A creditor charges a borrower a fee each time the borrower requests a payoff statement for a high-cost mortgage loan.

Why could this practice violate federal regulations?

A) Payoff statements may only be requested by attorneys
B) Fees for generation of payoff statements are generally banned, with limited exceptions
C) Payoff statements are prohibited for high-cost mortgages
D) Payoff statement fees are allowed only for adjustable-rate mortgages

9. Question

A lender finances points and fees associated with a high-cost mortgage by rolling the charges directly into the principal loan balance.

Why could this practice violate HOEPA restrictions?

A) High-cost mortgages may never include closing costs
B) Points and fees cannot be financed into the loan amount, although certain excluded bona fide third-party charges may be financed
C) Only FHA loans prohibit financing of fees
D) Points and fees may be financed only for reverse mortgages

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