What term refers to interest charged in excess of the legal limit set by state law?

The term that refers to interest charged in excess of the legal limit set by state law is usury. Usury laws are designed to protect consumers from being charged excessively high-interest rates on loans, which can lead to traps of debt that are difficult to escape. Each state has its own regulations defining what constitutes usurious interest, ensuring that lenders cannot impose unfair terms that exploit borrowers' vulnerabilities. Understanding usury is crucial for mortgage loan officers, as they must ensure compliance with these laws to protect their clients and maintain legality in their lending practices.

While other terms like loan sharking, predatory lending, and rate capping relate to lending practices, they do not specifically denote the act of charging interest above the legal limit. Loan sharking typically refers to lending money at extremely high-interest rates, often without regard for state laws, while predatory lending more broadly encompasses various unethical lending practices that may target vulnerable borrowers. Rate capping refers to the capping of interest rates or fees, which is a measure to prevent excessive charging but doesn't designate the act of charging over the legal limit itself.