What is prohibited under the Home Loan Protection Act (HLPA) if a mortgage meets specific points or fees thresholds?

Under the Home Loan Protection Act (HLPA), one significant prohibition is the financing of points and fees that total more than 5% of the loan amount when certain thresholds are met. This regulation is designed to protect consumers by limiting the cost associated with obtaining a mortgage, ensuring that borrowers are not subjected to excessive fees that could make loans unaffordable or lead to financial hardship.

The purpose of this limitation is to promote transparency and fairness in lending practices. By capping the points and fees, borrowers are better equipped to understand the total costs of their loans, thus fostering a more responsible lending environment. This is particularly important in the context of subprime lending, where borrowers may already be at a higher risk of default.

The other options presented do not specifically align with the provisions outlined by the HLPA. For instance, while charging excessive interest rates and imposing prepayment penalties can be problematic, these aspects are not explicitly covered by the HLPA in the same direct manner as the limitation on points and fees. Additionally, there is no regulation within the HLPA that pertains to the duration of loan terms in this specific context.