Which of the following practices is prohibited under the New Jersey Residential Mortgage Lending Act?

Charging undisclosed fees is prohibited under the New Jersey Residential Mortgage Lending Act because it undermines transparency and the ability of consumers to make informed decisions about their mortgage options. This regulation is designed to protect borrowers by ensuring that all costs associated with a mortgage are clearly communicated upfront. When fees are undisclosed, borrowers may find themselves facing unexpected costs that could influence their ability to repay the loan or weigh their options effectively. The act aims to promote fair lending practices and safeguard consumer rights in the mortgage lending process.

In contrast, providing detailed loan disclosures is a requirement under the act, as it ensures borrowers are well-informed. Imposing a processing fee is allowable as long as it is disclosed to the borrower. Offering flexible interest rates is also permitted, provided that all terms related to them are transparent and understood by the borrower. Thus, the prohibition of undisclosed fees is essential for maintaining ethical standards in mortgage lending.