The full explanation
Before making it, the lender must tell you in writing that it is high-cost and confirm that you received homeownership counseling. For these loans, the law bans things like prepayment penalties and most balloon payments. It does not apply, for example, to reverse mortgages.
An example
Teresa is offered a refinance with very high fees. The lender tells her in writing that it is a high-cost mortgage and that she must first get counseling about that loan. Teresa makes an appointment with a HUD-approved housing counselor.
You will see it in…
- The special notice the lender gives you before closing
- Offers to refinance or borrow against your home's value
- The federal rules in Regulation Z
