Which of the following practices is prohibited under the Consumer Home Loan Act?

Loan flipping is prohibited under the Consumer Home Loan Act because it refers to the practice of refinancing a borrower’s existing loan into a new loan, which is often done to generate fees for the lender without providing any significant benefit to the borrower. This practice can lead to increased costs for borrowers, particularly when it is performed repeatedly in a short period, resulting in them being trapped in a cycle of debt.

The act is designed to protect consumers from predatory lending practices, and loan flipping can exploit borrowers by pushing them into loans that may not be in their best financial interest. By prohibiting this practice, the Consumer Home Loan Act promotes fair lending standards and safeguards consumers against potential financial harm.

In contrast, loan restructuring, debt consolidation, and home improvement loans can all serve legitimate purposes and provide benefits to borrowers when done responsibly and ethically. These practices can often help improve a borrower’s financial situation or enhance property value, aligning more closely with the protective intentions of the legislation.