Alabama Real Estate Practice Exam

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What is required under the Consumer Credit Protection Act when applying for an ARM (Adjustable Rate Mortgage)?

Provision of a cosigner
Fixed rate conversion option
Certain information to be given to the buyer
Advance notice of rate changes only

The correct answer is: Certain information to be given to the buyer

The Consumer Credit Protection Act requires certain information to be disclosed to the buyer when applying for an ARM (Adjustable Rate Mortgage). This includes the initial interest rate and loan terms, as well as the total amount of interest that could potentially be paid over the life of the loan. Option A, provision of a cosigner, is not specifically required under this Act. Option B, a fixed rate conversion option, may be a feature offered by lenders, but it is not a mandatory requirement. Option D, advance notice of rate changes only, is also not sufficient under the Act, as the full details of the loan must be disclosed. Therefore, option C is the most accurate answer as it aligns with the requirements set forth by the Consumer Credit Protection Act for ARM applications.