West Virginia Mortgage Law Practice Test

The total amount of points and fees collected on a loan cannot exceed:

1. 10% of the loan amount

2. 3% of the loan amount

3. 6% of the loan amount

4. 5% of the loan amount

The correct answer is: 10% of the loan amount

The total amount of points and fees collected on a loan is capped at 3% of the loan amount. This limit is established under the rules l aimed to protect borrowers from excessive costs associated with their loans. These constraints are particularly relevant in determining how much a lender can charge at the origination of the loan, ensuring that expenses remain manageable for borrowers. This regulation is designed to promote fair lending practices and to prevent predatory lending behaviors. It ensures that borrowers are not burdened by hefty upfront costs that could contribute to financial strain or limit access to credit. In the context of the other provided options, while they indicate varying thresholds, the legally acceptable limit for points and fees is specifically set at 3% of the loan amount, affirming the validity of that choice in the question.