If the institution offers both full and reduced documentation loans and there is a pricing premium attached to the reduced documentation loan, the consumer should:
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A. B. C. D.A
The answer to this question is A. Be alerted to this fact.
The institution must disclose to the consumer that a pricing premium is attached to the reduced documentation loan. This disclosure is necessary to ensure that the consumer is fully informed about the pricing of the loan options available to them.
The Truth in Lending Act (TILA) requires lenders to provide consumers with clear and accurate information about the costs and terms of credit. This includes information about any pricing premiums that may be associated with different loan options.
In addition, the Consumer Financial Protection Bureau (CFPB) requires lenders to provide consumers with a Loan Estimate, which outlines the key terms of the loan, including the interest rate, fees, and any other costs associated with the loan. The Loan Estimate must clearly indicate if a pricing premium is attached to a particular loan option.
Overall, it is important for lenders to provide consumers with transparent and accurate information about their loan options, including any pricing premiums that may be associated with reduced documentation loans. This helps consumers make informed decisions about their borrowing options and ensures that they are not taken advantage of by unscrupulous lenders.