Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

In the context of higher-priced mortgage loans, regulations stipulate that creditors must obtain a second appraisal if the purchase price exceeds a certain percentage above the seller's acquisition price within a specified timeframe. This requirement is designed to protect consumers by ensuring that the property is not being sold at an inflated price which could lead to financing based on overvalued property.

The correct answer identifies a threshold of 20% as the percentage by which the price in the consumer's purchase agreement must exceed the seller's acquisition cost to trigger the requirement for a second appraisal. This regulation aims to provide a safeguard against potential predatory lending practices and ensure fair property valuation for the borrower’s benefit.

In practice, when appraisals are required for higher-priced mortgage loans, they ensure that the loan amount is reflective of the actual value of the property, thus minimizing the risk for both the lender and the borrower. This regulatory measure helps prevent situations where borrowers could find themselves underwater on their loans if the property were to lose value shortly after purchase.