Which of the following is true concerning prepayment penalties under federal law?

The assertion that prepayment penalties are permitted only if the mortgage is a qualified mortgage is accurate because, under federal law, particularly the Dodd-Frank Wall Street Reform and Consumer Protection Act, specific regulations govern the imposition of prepayment penalties. Qualified mortgages (QMs) offer certain protections to borrowers, including restrictions on the use of prepayment penalties. If a mortgage is classified as a qualified mortgage, it may include a prepayment penalty, but this penalty is limited in scope: it must be disclosed clearly, must be reasonable in duration and amount, and cannot last longer than three years.

Understanding the context of prepayment penalties is essential for borrowers and lenders alike. Prepayment penalties can serve to protect lenders from potential losses if a borrower pays off a loan early; however, they are heavily regulated to ensure borrowers are not unfairly penalized.

The other options do not align with current federal regulations regarding prepayment penalties. They lack the necessary restrictions and conditions imposed under the law, making them incorrect interpretations of how prepayment penalties can be enforced legally.