Question

Consider a loan of $120,000 secured by the borrower's primary residence. The total points and fees on the loan come to $6,000, or 5% of the loan amount. Is this transaction a Section 32 loan?

A) Yes
B) No

Answer 1

Yes, the transaction is a Section 32 loan.

Step-by-step explanation:

A Section 32 loan is a type of mortgage loan that is subject to additional requirements and protections under the Truth in Lending Act (TILA). One of the key criteria for a loan to be considered a Section 32 loan is that the points and fees charged on the loan cannot exceed a certain threshold. In this case, the total points and fees of $6,000 represent 5% of the loan amount, which means it exceeds the threshold for a Section 32 loan. Therefore, the transaction described is a Section 32 loan.