Question

below is an excerpt from a home loan contract.

\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.\

according to the contract, which of the following is not a responsibility of the buyer?
a. pay the monthly payment on time.
b. notify the bank if a payment is going to be late.
c. pay an additional $75.00 with a payment made after the 15th day of the month it was due.
d. notify the bank of his or her intent to split a late payment into three partial payments.

Explanation:

Analyze the contract terms

Using the Loan Contract Analysis knowledge point, we examine the responsibilities explicitly stated in the excerpt:

• "The Buyer shall make each monthly payment by the first day of the month it is due." (This supports option a).
• "A payment not received by the fifteenth day of the month it is due will be subject to a late charge of $75.00." (This supports option c).
• "Notification of the Buyer's intent to [divide any payment not received into not more than three equal installments] must be made by written letter or phone call... within one business week of delinquency." (This supports option d).

Evaluate the options

Using the Delinquency Terms knowledge point, we identify which option is not mentioned as a buyer's responsibility:

• Option b states "Notify the bank if a payment is going to be late."
• The contract specifies consequences for late payments (delinquency, late charges, credit reporting) and options after delinquency occurs, but it does not require or mention a responsibility to notify the bank before a payment becomes late.

Answer:

• a. Pay the monthly payment on time.
• b. Notify the bank if a payment is going to be late. (Correct answer)
• c. Pay an additional $75.00 with a payment made after the 15th day of the month it was due.
• d. Notify the bank of his or her intent to split a late payment into three partial payments.