To which loans does the homeownership counseling notice apply?

The homeownership counseling notice applies to all federally related mortgage loans excluding reverse mortgages, making this the correct answer. The intent behind the counseling notice is to ensure that borrowers are well-informed about their mortgage options, responsibilities, and the home-buying process. This requirement encompasses a broad range of loans backed by federal insurance or guarantees, including conventional loans with federal involvement, FHA loans, and VA loans, among others.

Excluding reverse mortgages is significant because these types of loans have different operational structures and risk profiles, and they typically serve a distinct demographic (homeowners aged 62 and older). By focusing on federally related loans, the regulation aims to provide the necessary education and support to borrowers who may need guidance navigating the complexities of homeownership financing, which is particularly vital for first-time buyers who may lack prior experience.

This broad applicability ensures that most individuals seeking to obtain a mortgage will have access to counseling resources, thus promoting responsible borrowing and reducing the risk of default.