Florida Real Estate Practice Exam

Which of the following items is something a lender is prohibited from doing if the lender wants to write qualified mortgages?

1. Amortization

2. Balloon Interest

3. Debt to income ratio less than 43%

4. Payback terms longer than 30 years

The correct answer is: Payback terms longer than 30 years

A lender is prohibited from writing qualified mortgages with payback terms longer than 30 years because it would create a higher risk for the borrower and make it more difficult for them to repay the loan. This could potentially lead to a higher likelihood of default and foreclosure. Amortization and debt to income ratio are important factors in determining the borrower's ability to repay the loan, so they are not prohibited. Balloon interest is also not prohibited, but it is a risky option for the borrower as it requires a large lump sum payment at the end of the loan term. Therefore, the correct answer is D, as it is the only option that directly goes against the guidelines for a qualified mortgage.