What does the Residential Mortgage Originator and Servicer Licensing Act prohibit regarding prepayment penalties?

The Residential Mortgage Originator and Servicer Licensing Act specifically prohibits charging a prepayment penalty more than 42 months after the closing of a mortgage loan. This regulation is in place to protect borrowers by ensuring they are not unfairly charged for paying off their loans early beyond a reasonable timeframe. By restricting the duration of prepayment penalties, the law promotes transparency and fairness in lending practices, allowing borrowers flexibility in managing their loans without incurring excessive fees.

The other options don't align with the stipulations set forth by the act. For instance, charging a prepayment penalty at any time is not prohibited, only beyond the specified period. Similarly, the act does not limit prepayment penalties to fixed-rate loans only, which would unfairly discriminate against certain types of borrowers. Thus, the correct answer aligns with the legislative intent to protect consumers in the mortgage market.