In New Jersey, which type of loan requires special disclosures due to its higher cost?

The correct choice identifies high-cost mortgages as requiring special disclosures in New Jersey due to their elevated cost. Under the New Jersey Residential Mortgage Lending Act, a high-cost mortgage is defined by certain thresholds, which include the interest rates or total points and fees that exceed specified limits when compared to conventional loans.

High-cost mortgages are often seen as riskier products for borrowers, leading to increased regulatory scrutiny and the need for transparency regarding the terms and costs associated with these loans. The additional disclosures are designed to protect borrowers by ensuring they understand the terms, potential risks, and total costs involved with high-cost mortgages.

This stands in contrast to conventional loans, adjustable-rate mortgages, and subprime loans, which do not share the same specific regulatory requirements regarding disclosures connected with high costs. While other types of loans may have their own regulations and disclosure obligations, high-cost mortgages explicitly trigger additional protective measures due to their nature, which can place substantial financial strain on borrowers.