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Question # 4

According to the TILA-RESPA Integrated Disclosure rule (TRID), changed circumstances that may result in a revised Loan Estimate include which of the following situations?

A.

Market fluctuations on a locked loan

B.

The borrower receiving a salary increase

C.

A natural disaster in the area where the loan will close

D.

Changes that the MLO should have known at the time the Loan Estimate was provided

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Question # 5

Redlining in mortgage lending refers to which of the following practices?

A.

Highlighting areas of concern on an appraisal report

B.

Highlighting areas of concern on a mortgage application

C.

Denying services to residents in states that a company is not licensed in

D.

Denying services to residents of a certain area based on race or ethnicity

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Question # 6

Which of the following scenarios describes an assumable loan?

A.

A borrower has an option to take out a second mortgage

B.

A borrower has an option to choose a loan servicer.

C.

A purchaser of a property may be able to take over the existing loan payments.

D.

A loan holder can sell the loan.

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Question # 7

During the closing the borrower notices that the interest rate increased from 3.250% to 3.875%. The lender must:

A.

tell the borrower to close the loan.

B.

close the loan, then re-disclose after the loan funds.

C.

postpone the closing, re-disclose and wait three days.

D.

postpone the closing, re-disclose and wait three business days.

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Question # 8

According to the Equal Credit Opportunity Act (ECOA), which of the following terms is defined as a refusal to grant credit based on the requested loan terms, an unfavorable change in loan terms, or a termination of an account/application?

A.

Adverse action

B.

Account closure

C.

Credit closure

D.

Denial of credit

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Question # 9

Which of the following settlement service charges is considered a finance charge for the purpose of calculating a loan's APR?

A.

Credit report fee

B.

Origination charge

C.

Transfer tax charge

D.

Public record recording fee

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Question # 10

Which of the following services is included in the definition of a settlement service?

A.

Flood insurance

B.

Homeowners association fees

C.

Title company/escrow agent services

D.

Sale of the mortgage loan on the secondary market

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Question # 11

Which of the following is an origination fee?

A.

Appraisal fee

B.

Underwriting fee

C.

Title insurance fee

D.

Prepaid Interest fee

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Question # 12

The TILA-RESPA Integrated Disclosure rule (TRID) applies to most closed-end consumer credit transactions secured by real property, which includes:

A.

reverse mortgages.B home equity lines of credit (HELOCs;

B.

refinance of a condominium property.

C.

loans secured by a mobile home on a leased lot.

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Question # 13

Which of the following responses describes servicing transfers?

A.

The transfer of an appraisal from one lender to another

B.

The transfer of a HUD case number from one lender to another

C.

The transfer of the responsibility to collect payments on the loan from one lender to another

D.

The transfer of the processing of a loan to an independent service provider such as a contract processing provider

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Question # 14

What is the maximum civil penalty that is permitted to be imposed for each violation or failure to comply with the SAFE Act?

A.

$2,500 for each act or omission

B.

000 for each act or omission

C.

$2,500 for each act or omission; $25,000 maximum

D.

$25, 000 for each act or omission: $250,000 maximum

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Question # 15

Which of the following applicant characteristics is legally permitted to be considered in evaluating credit risk?

A.

Whether the applicant seems likely to have children

B.

Whether the applicant has a phone number listing in their name

C.

Whether the applicant's age makes them ineligible for credit-related insurance

D.

Whether the alimony payments the applicant relies on for income are likely to continue and to be consistently made

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Question # 16

What is the minimum amount of flood insurance a lender must require on a residential building located in a special flood hazard area?

A.

$50,000 for residential property structures

B.

$150,000 for residential property structures

C.

$250,000 for residential property structures

D.

$350,000 for residential property structures

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Question # 17

Which of the following factors does not affect the funding fee on a VA purchase?

A.

Service-connected disability

B.

First-time user

C.

Marital status

D.

Loan-to-value ratio

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Question # 18

Which of the following fees is a finance charge?

A.

A notary fee

B.

An origination fee

C.

An appraisal fee

D.

A late payment fee

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Question # 19

How long does Regulation Z of the Truth in Lending Act (TILA) require a mortgage company to retain the Closing Disclosure for a closed mortgage loan?

A.

2 years

B.

3 years

C.

4 years

D.

5 years

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Question # 20

A second (subordinate) mortgage loan includes:

A.

government home purchase loan.

B.

conventional home purchase loan.

C.

home equity conversion mortgage.

D.

home equity lines of credit (HELOCs;

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Question # 21

Within how many days must a creditor notify an applicant of action taken on a completed mortgage loan application?

A.

15 days

B.

30 days

C.

45 days

D.

60 days

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Question # 22

The ability to originate loans under temporary authority applies to which of the following?

A.

Previously licensed real estate brokers

B.

Previously registered mortgage loan originators (MLOs)

C.

An MLO who has scheduled their test but not completed it

D.

An MLO who is still waiting for their credit check to be completed

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Question # 23

The total monthly payment for a loan secured by a 30-year fixed-rate mortgage with an escrow account could increase for which of the following reasons?

A.

The monthly utility bills have increased.

B.

The interest rate for the fixed-rate mortgage has increased.

C.

The annual property taxes and/or homeowners insurance premiums have increased.

D.

The mortgage servicer is collecting the payment for a new auto loan with the mortgage.

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Question # 24

An easement:

A.

is a mortgage modification.

B.

is a right to cross or otherwise use someone else's land for a specified purpose.

C.

allows a loan applicant to close on a loan even if all the stipulations have not been met.

D.

allows a borrower to make less than the required payments without going through a full mortgage modification.

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Question # 25

Which of the following real estate methods allows investors to estimate the value of a property by taking the rent collected and dividing it by the capitalization rate?

A.

Cost approach

B.

Income approach

C.

Residual method approach

D.

Sales comparison approach

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Question # 26

A borrower has told the mortgage loan originator that they had recently paid off an account that was listed on their credit report. Which of the following information will they need to provide the lender to prove the account has been paid off?

A.

Oral confirmation from the borrower

B.

An updated statement showing a zero balance

C.

A letter from the borrower explaining that they paid it off

D.

No additional information required

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Question # 27

Illegal fee splitting occurs when:

A.

two service providers split a fee.

B.

wages are split by two employees.

C.

fees are split between lender and broker.

D.

three companies split a fee but one did no work.

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Question # 28

Which of the following individuals is required to be licensed as a mortgage loan originator (MLO)?

A.

A seller providing financing to the purchaser of a dwelling owned by the seller

B.

A loan processor performing clerical duties under the direction and supervision of a licensed broker

C.

An MLO’s assistant explaining and describing the steps that a borrower will need to take in order to obtain a loan

D.

An underwriter presenting a revised loan offer to a borrower under the direction and supervision of a licensed lender

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Question # 29

What are the maximum basis points added to the average prime offer rate (APOR) that keep a loan's APR as a qualified mortgage under the Consumer Financial Protection Bureau's (CFPB's) Safe Harbor Rule?

A.

85 basis points

B.

100 basis points

C.

150 basis points

D.

300 basis points

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Question # 30

A borrower works at Company XYZ and was recently approved for a cash-out refinance of her primary residence. The closing is scheduled for Friday. On Monday of closing week, the mortgage loan originator (MLO) sees on the local news that XYZ is closing and the employees have been let go. Which of the following actions, if any, should the MLO take?

A.

Tell the borrower not to say anything at closing

B.

Nothing, as the loan has already been approved

C.

Recommend that the borrower attend homeownership counseling

D.

Notify the underwriter regarding possible change of borrower's employment status

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Question # 31

The loan-to-value ratio for an FHA loan is calculated by dividing the loan amount by:

A.

the purchase price of the property.

B.

the appraised value of the property.

C.

the lesser of the purchase price or appraised value.

D.

the purchase price, plus the mortgage insurance for FHA loans.

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Question # 32

A licensed mortgage loan originator (MLO) sharing his commission with another licensed MLO at his company for actual services performed on a loan is considered which of the following terms?

A.

Tip sharing

B.

Fee splitting

C.

Single fee method

D.

Double fee method

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Question # 33

Which of the following statements defines the term "business day" in a mortgage rescission under the Truth in Lending Act (TILA)?

A.

Every day from 9 a.m. to 5 p.m.

B.

Every day except Sunday and legal holidays

C.

Any days except Saturdays and Sundays

D.

Any days that employees may access the office to work

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Question # 34

The term "primary mortgage market" refers to which of the following responses?

A.

The medium in which mortgages are bought and sold following origination

B.

The role of Fannie Mae, Freddie Mac and Ginnie Mae in the mortgage industry

C.

The process by which mortgages are pooled and converted to marketable securities

D.

The confluence of borrowers and mortgage loan originators to negotiate loan terms and complete mortgage transactions

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Question # 35

Consumer complaints and the analysis of complaints play a vital role in identifying weaknesses in elements of a company's:

A.

hiring procedures and training.

B.

compliance management training and internal controls

C.

secondary marketing practices of selling loans to investors.

D.

compliance management, senior management and branch locations.

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Question # 36

Which of the following loans are covered by TILA-RESPA Integrated Disclosure (TRID)?

A.

Second home loans

B.

Chattel-dwelling loans

C.

Reverse mortgage loans

D.

Home equity lines of credit (HELOCs)

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Question # 37

When applying for a home equity line of credit (HELOC), consumers should review documentation carefully and be sure that they consider:

A.

if the HELOC is insured by HUD.

B.

if the HELOC requires private mortgage insurance

C.

if the company offering the HELOC has deposit accounts insured by the FDIC.

D.

the APR and the costs of acquiring and maintaining the HELOC.

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Question # 38

According to Fannie Mae, a loan with a purchase transaction loan amount of $160,000, sales price of $180,000, and an appraised value of $200,000 has a loan-to-value ratio of what percentage?

A.

80%

B.

88%

C.

89%

D.

90%

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Question # 39

It is acceptable for a lender to request a co-applicant in which of the following situations?

A.

The borrower will not qualify for the loan on their own.

B.

The borrower's future income is dependent on the co-applicant.

C.

The co-applicant will be residing in the house with the borrower.

D.

The co-applicant is gifting money to the borrower to make a down payment on a purchase-money mortgage

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Question # 40

Which of the following statements is not true concerning "higher-priced mortgage loans" as defined in the Truth in Lending Act (TILA)?

A.

Creditors must verity income and assets in order to determine whether the loan applicant has the ability to repay the loan.

B.

Creditors must establish an escrow account for taxes and property insurance on first lien mortgage loans.

C.

There are restrictions on prepayment penalties.

D.

Borrowers have a five-day right of rescission.

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Question # 41

Which of the following data should not be included in a borrower's personal data collected under the Home Mortgage Disclosure Act (HMDA)?

A.

Race

B.

Religion

C.

Ethnicity

D.

Sex

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Question # 42

According to the Truth in Lending Act (TILA), a dwelling includes which of the following?

A.

An unimproved lot

B.

A six-unit apartment complex

C.

An individual condominium unit

D.

A timeshare

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Question # 43

Which of the following statements describes the purpose of the TILA-RESPA Integrated Disclosure (TRID)?

A.

It provides a three-day cooling-off period for all loans

B.

It allows borrowers five days to review the final amount needed for settlement.

C.

It ensures that the terms and fees that are quoted at the time of application do not change.

D.

It aids borrowers in understanding the loan transaction process by utilizing readily understandable language.

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Question # 44

In a federally related mortgage loan on a principal dwelling, which of the following parties has the right to rescind the transaction?

A.

Only the borrower who makes the most income

B.

Only the borrower with the majority interest in the transaction

C.

Only the person who will actually occupy the property

D.

Any person who has an ownership interest in the property

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Question # 45

A borrower is approved for an 80/20 loan. Which of the following describes the lien priority for the 20% loan?

A.

First

B.

Second

C.

First as it will be combined with the 80% loan

D.

Second but combined with any other liens

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Question # 46

A mortgage company is permitted to verify which of the following information?

A.

Sex

B.

Religion

C.

Employment status

D.

Childbearing intentions

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Question # 47

Which of the following is a requirement for a mortgage loan originator (MLO) license?

A.

Completed at least 10 hours of pre-licensing education

B.

Have not had an MLO license revoked in the last five years

C.

Have never been convicted of a felony in a domestic, foreign or military court

D.

Are covered by either a net worth or surety bond or pay into a state fund as required by the state loan originator's supervisory authority

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Question # 48

How many days before consummation must a borrower receive a revised Loan Estimate?

A.

4 business days

B.

5 business days

C.

7 business days

D.

10 business days

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Question # 49

A loan secured by any lien other than the first lien position is referred to as:

A.

Agency

B.

Subordinate

C.

Collectible

D.

Non-conforming

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Question # 50

A mortgage loan originator (MLO) submits a refinance application for a primary residence. However, if the MLO later discovers that the property is no longer occupied by the borrower, which of the following actions, if any, should the MLO take?

A.

Allow the application to be underwritten before raising any concerns

B.

Take no action as the property was occupied at the time of application

C.

Notify the MLO's employer and/or the mortgage lender of the discovery

D.

Allow the mortgage loan processor and/or underwriter to discover this through their due diligence processes

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Question # 51

During the loan application process, which of the following documents specifies the time period that a mortgage lender agrees to hold the mortgage interest rate at a certain percentage?

A.

Loan application

B.

Preapproval letter

C.

Closing Disclosure

D.

Rate lock agreement

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Question # 52

Which of the following responses describes the primary reason to conduct a title search?

A.

To confirm the identity of the applicant

B.

To determine the amount of homeowner's insurance required

C.

To identify any preexisting liens against the collateral property

D.

To determine whether a buyer can purchase the collateral property

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Question # 53

A customer wants an estimate of closing costs for the purchase of a $300,000 property with a 20% down payment. Although she has provided the other five pieces of information, a loan application, per Regulation X, has not been triggered because she has not yet found a property to purchase. Which of the following responses best describes what should be done, if anything, according to Regulation Z when a written cost estimate is given prior to a Loan Estimate?

A.

Use a fictitious address in order to trigger a loan application so that a Loan Estimate can be provided

B.

Regulation Z does not allow a creditor to provide any estimate of costs until a complete loan application has been made by the borrower.

C.

Provide an estimate with the following in 12-point font: "This is not an Official Consumer Financial Protection Board (CFPB) Loan Estimate."

D.

Provide an estimate with the words: "Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan."

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Question # 54

Which of the following responses best defines a red flag?

A.

Proof that specific activity shows identity theft

B.

Effective oversight by lenders to prevent borrower identity theft

C.

Reasonably foreseeable risk taken by borrowers to prevent identity theft

D.

A pattern, practice or specific activity that indicates the possible existence of identity theft

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Question # 55

Loan applications must include all of the following information with respect to mortgage loan originators (MLOs) except the:

A.

Employer's NMLS unique identifier.

B.

Return fax number.

C.

MLO's NMLS unique identifier.

D.

MLO's name.

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Question # 56

How many continuing education hours must mortgage loan originators complete every year to renew their license?

A.

3 hours

B.

8 hours

C.

16 hours

D.

20 hours

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Question # 57

When obtaining a mortgage loan, title insurance is required to protect the:

A.

settlement agent.

B.

seller of the property.

C.

mortgage loan officer.

D.

lender providing the financing.

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Question # 58

Which of the following fees or charges is an allowable closing cost typically found on a Closing Disclosure?

A.

Origination charge

B.

Referral fee

C.

Servicing fee

D.

Yield-to-loan fee

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Question # 59

Which of the following loan types is covered by the Real Estate Settlement Procedures Act (RESPA)?

A.

Auto loan

B.

Student loan

C.

Residential real estate loan

D.

Commercial real estate loan

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Question # 60

A borrower may rescind their mortgage loan until midnight of the third:

A.

Calendar day or delivery of all material disclosures, whichever occurs first.

B.

Calendar day following consummation or delivery of all material disclosures, whichever occurs last.

C.

Business day following consummation or delivery of all material disclosures, whichever occurs last.

D.

Business day following consummation or delivery of all material disclosures, whichever occurs first.

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Question # 61

The characteristics of a fixed-rate mortgage include a:

A.

fixed margin.

B.

fixed interest rate.

C.

mandatory 30-year term.

D.

minimum balloon payment.

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Question # 62

Which of the following statements is permissible in an advertisement?

A.

"Current interest rates as low as 3.50% with an APR of 3.99%. Contact us today!"

B.

"Looking for a VA loan? We are endorsed by and affiliated with the VA administration."

C.

"Take out a reverse mortgage loan with us, and you can stay in your home as long as you want and never make a payment."

D.

"Close a mortgage loan with us within the next 60 days and when interest rates drop, we will refinance your loan at a lower rate guaranteed."

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Question # 63

If a borrower is using commission income for 25% or more of their total income, the FHA lender will:

A.

Disregard the commission income completely.

B.

Only accept one-half of the claimed commission income.

C.

Only accept the commission income if it has been steady for three years.

D.

Request two years of signed tax returns proving receipt of the income.

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Question # 64

The SAFE Act defines a nontraditional mortgage as all of the following except:

A.

A 30-year fixed rate mortgage with a 25% down payment.

B.

A payment option ARM with a down payment of 5%.

C.

15-year mortgage with an interest rate of 10%.

D.

An interest-only mortgage.

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Question # 65

Mortgage loan originators planning to renew their licenses are required by the SAFE Act to complete which of the following education topics as part of their mandatory annual continuing education?

A.

Credit score modeling standards

B.

Mortgage loan loss mitigation standards

C.

Nontraditional mortgage lending standards

D.

30-year conventional mortgage lending standards

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Question # 66

Which of the following does a higher-priced mortgage require if the seller acquired the home 90 days or fewer prior to the date of the purchase contract and the sales price exceeds the seller's acquisition price by more than 10%?

A.

One written appraisal and one broker price opinion

B.

One written appraisal only and one automated valuation model

C.

Two written appraisals only

D.

Two written appraisals and one automated valuation model

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Question # 67

Which of the following is considered a prohibition under the Real Estate Settlement Procedures Act (RESPA)?

A.

Hosting an educational seminar at no cost to the participants

B.

Donating an item of value to a silent auction hosted by a charity

C.

Sponsoring a little league team where the company name is on the uniforms

D.

Renting office space at lower rates based on the whole or in the amount of business referred

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Question # 68

A borrower who knowingly makes false statements on a federally related mortgage loan to obtain property may be:

A.

imprisoned for 10 to 16 months

B.

fined up to JB10,000 or imprisoned for 6 months.

C.

fined up to $1 million and imprisoned for 30 years.

D.

fined up to the total purchase price of their home.

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Question # 69

Which of the following loan types may be considered a qualified loan under ability-to-pay rules

A.

An interest-only mortgage

B.

A loan with a balloon payment

C.

A loan with negative amortization

D.

A mortgage with an adjustable rate

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