West Virginia Mortgage Law Practice Test

Under West Virginia law, what is the limit on late fees for mortgage loans?

1. The greater of 2% or $20

2. The greater of 3% or $25

3. The greater of 5% or $30

4. The greater of 7% or $50

The correct answer is: The greater of 2% or $20

The correct answer, which states that the limit on late fees for mortgage loans in West Virginia is the greater of 2% or $20, aligns with the provisions set out in West Virginia Code. This regulation provides a safeguard for borrowers, ensuring late fees remain reasonable and not excessively punitive. By establishing a percentage and a fixed dollar amount, the law allows for some flexibility depending on the amount due on the mortgage. If the calculated percentage is less than the fixed amount, the fixed amount will apply, and vice versa. This two-tier system ensures that borrowers are not subjected to disproportionately high fees regardless of their specific loan amount, thus promoting fairness in the lending process. The other options present higher percentages and fixed amounts which do not conform to the statutory limitations established by West Virginia law, making them incorrect choices. These regulations are crucial in maintaining transparency and protecting consumers in the mortgage lending process.