West Virginia Mortgage Law Practice Test

Which of the following is specifically considered to be an unfair trade practice in West Virginia?

1. Charging an interest rate greater than 8%

2. Originating a mortgage loan with a balloon payment

3. Securing a mortgage loan with personal property

4. Advertising products that do not exist in order to entice applicants

The correct answer is: Charging an interest rate greater than 8%

The correct answer highlights a critical aspect of consumer protection within West Virginia's mortgage laws. Charging an interest rate greater than 8% can be considered an unfair trade practice because it may violate state usury laws designed to protect consumers from excessively high interest rates. In many jurisdictions, including West Virginia, there are specific caps on interest rates to ensure that borrowers are not subjected to exploitative lending practices. In contrast, originating a mortgage loan with a balloon payment, although it may carry certain risks for borrowers, is not automatically classified as an unfair trade practice unless it is done under misleading or deceptive conditions. Similarly, securing a mortgage loan with personal property is a common practice in some types of lending arrangements and does not necessarily constitute an unfair trade practice. Advertising products that do not exist to entice applicants is indeed deceptive, but in this scenario, the focus is on interest rate charges as a direct violation of consumer protection laws in West Virginia. This underscores the intention of the legislation to keep lending practices fair and transparent for consumers, ensuring they are not overly burdened with debt due to exorbitant interest rates.