Which action must lenders take when a mortgage is deemed "high-cost"?

Study for the CFPB Mortgage Compliance Test. Learn with detailed quizzes and flashcards. Understand the key concepts, regulations, and guidelines with comprehensive explanations. Get ready to ace your exam!

When a mortgage is classified as "high-cost," lenders are required to provide additional disclosures to the borrower. This is mandated by the Home Ownership and Equity Protection Act (HOEPA), which was implemented to protect consumers from predatory lending practices. High-cost loans, identified by their specific features, trigger a set of disclosure requirements that aim to ensure borrowers are well-informed about the terms, costs, and risks associated with these loans. This includes providing details such as the total cost of the loan, the terms, and any penalties or fees that may apply, which helps empower borrowers to make informed decisions.

The other actions listed in the choices do not align with the requirements set forth for high-cost loans. For instance, lenders are not obligated to offer lower interest rates or longer payment terms based on the high-cost designation, nor are they required to waive all fees associated with the loan. The critical requirement in this scenario focuses specifically on enhancing transparency and consumer protection through additional disclosures.

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