Question

Impound accounts required under Section 35 may be canceled upon the earlier of the termination of the debt or the borrower's request made no sooner than ___________ after loan consummation.

A) 1 year
B) 2 years
C) 3 years
D) 4 years

Answer 1

Impound accounts under Section 35 can be cancelled at the request of the borrower no sooner than two years after loan consummation. Usury laws capping interest rates at 35% would likely reduce the number of high-interest loans and protect borrowers from excessive rates.

Step-by-step explanation:

The correct answer to the question regarding impound accounts is option B) 2 years. Impound accounts, also known as escrow accounts, are typically established by lenders to ensure that property taxes and insurance costs are paid. For mortgages subject to Section 35, which refers to higher-priced mortgage loans, borrowers have the option to request cancellation of such accounts. According to the regulation, borrowers can request this cancellation no sooner than two years after loan consummation. It's important to maintain good payment history to be eligible for this request.

Regarding the impact of usury laws that limit interest rates to no more than 35%, the likely outcome would be a decrease in the number of high-interest loans made, as lenders may find them less profitable. Additionally, borrowers would be protected from excessively high-interest rates, potentially leading to more manageable loan repayments.