Which of the following actions is required when an adjustable-rate mortgage is established?

When establishing an adjustable-rate mortgage (ARM), issuing a notice of the interest rate adjustment is required because borrowers need to be informed about how their interest rate may change over time. This notice serves to ensure transparency and allows borrowers to understand the implications of their loan terms, especially since ARMs can fluctuate based on market conditions. It is important for the borrower to know when and how their payments might increase or decrease as a result of interest rate adjustments.

This action aligns with regulatory requirements, such as those set forth by the Consumer Financial Protection Bureau (CFPB), ensuring that borrowers have adequate notice of changes that can affect their financial obligations. This communication helps borrowers to plan accordingly and make informed decisions about their mortgage.