Question

below is an excerpt from the home loan contract kyle signed with his bank.
\the sum of the principal of the loan and all applicable interest will be divided into 360 monthly payments according to the amortization schedule.
the buyer shall make each monthly payment by the first day of the month it is due. a payment not received by the first day of the month it is due will be considered delinquent. a payment not received by the fifteenth day of the month it is due will be subject to a late charge of $75.00. if a payment is not received by the last day of the month it is due, the buyer and transaction shall be reported to the appropriate credit agencies.
in the event of delinquency, the buyer may divide any payment not received into not more than three equal installments to be included on the next consecutive monthly payments. notification of the buyers intent to do so must be made by written letter or phone call to the phone number and address listed below within one business week of delinquency.\
kyle failed to make his payment by the first of this month. kyles monthly payment is currently $1,200. if kyle decides to split the missing payment into two parts and pay it over the next two months, which of the following statements is false?
a. kyle will be reported to a credit agency.
b. kyle will be charged a $75 late fee for the missing payment.
c. kyle has one business week to inform his bank of the late payment.
d. kyles monthly payments for the next two months will remain $1,200.

Explanation:

Analyze contract terms

The contract states that a payment not received by the first day of the month is considered delinquent. If a payment is not received by the fifteenth day, a late charge of \$75.00 is applied. If not received by the last day of the month, it is reported to credit agencies.

Evaluate delinquency options

In the event of delinquency, the Buyer may divide the missed payment into not more than three equal installments to be included on the next consecutive monthly payments. Notification of this intent must be made within one business week of delinquency.

Assess Kyle's scenario

Kyle's monthly payment is \$1,200. He missed the payment on the first. He decides to split this \$1,200 payment into two equal parts (\$600 each) and pay it over the next two months.

Verify each statement

• Statement a: "Kyle will be reported to a credit agency." Since he is resolving the delinquency through the installment option within the month, he will not reach the last day of the month unpaid, so he is not reported. Thus, this statement is false.
• Statement b: "Kyle will be charged a \$75 late fee for the missing payment." Since the payment was not received by the 15th, he is subject to the \$75 late fee. This statement is true.
• Statement c: "Kyle has one business week to inform his bank of the late payment." The contract requires notification within one business week of delinquency. This statement is true.
• Statement d: "Kyle's monthly payments for the next two months will remain \$1,200." Since he is adding \$600 (\(\$1,200 / 2\)) to each of the next two payments, his payments will increase to \$1,800. Thus, this statement is false.

Identify the false statement

Looking closely at the options, both (a) and (d) describe false outcomes. However, let's re-evaluate standard contract interpretation: if he splits the payment, his future payments must include the installments, meaning they cannot remain \$1,200. Thus, statement (d) is definitely false. Furthermore, because he resolves the delinquency via the installment agreement, he avoids being reported to a credit agency, making (a) also technically false under the assumption he executes the agreement. In standard multiple-choice questions of this type, the direct mathematical change in payment amount makes (d) the primary intended false statement because his payments must change to \$1,800. Let's look at the phrasing: "Kyle's monthly payments for the next two months will remain \$1,200" is directly contradicted by the installment addition.

Answer:

• (a) Kyle will be reported to a credit agency.
• (b) Kyle will be charged a $75 late fee for the missing payment.
• (c) Kyle has one business week to inform his bank of the late payment.
• (d) Kyle's monthly payments for the next two months will remain $1,200. (Correct answer)