What type of loans requires counseling as a requirement?

High-cost loans require counseling as a condition to ensure that borrowers understand the terms, risks, and obligations associated with these types of loans. This requirement is intended to protect consumers from potentially predatory lending practices and to promote financial literacy.

Counseling helps borrowers recognize the implications of taking on a high-cost loan, such as the total costs over time, payment schedules, interest rates, and any penalties. The intent behind this requirement is to equip borrowers with the knowledge they need to make informed financial decisions.

In contrast, traditional mortgages, student loans, and auto loans typically do not have a mandated counseling requirement. This does not mean that borrowers shouldn't seek advice or information regarding these loans; rather, the counseling requirement specifically applies to high-cost loans due to their more complex nature and higher risk for consumers.