What constitutes a "high-cost mortgage"?

A "high-cost mortgage" is defined by the Consumer Financial Protection Bureau (CFPB) based on specific thresholds for points and rates. When a mortgage exceeds these thresholds, it is classified as high-cost and is subject to additional regulations designed to protect borrowers from potentially predatory lending practices. These thresholds take into account various factors including the annual percentage rate (APR) and the total points and fees charged in connection with the mortgage.

This definition is part of the broader framework established under the Home Ownership and Equity Protection Act (HOEPA), which serves to inform consumers and provide them with certain rights and protections when they encounter loans that carry higher costs. Thus, understanding the criteria set for high-cost mortgages is essential for compliance with relevant laws and ensuring that borrowers are being treated fairly.

In contrast, adjustable interest rates, private mortgage insurance, or standard loans with lower interest rates do not inherently signify a high-cost mortgage, as they do not consider the specific numerical thresholds that indicate high-cost status.