what is considered a high cost mortgage loan

Best answer


Above-average fees or interest

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  • What is a high-cost mortgage loan?

  • High-cost loans can’t have certain features under federal law, such as some types of balloon payments in the terms of the mortgage. A high-cost loan can’t charge fees for loan modifications loan or for a loan payoff statement. There are restrictions on fees and practices, such as a limit on late fees to 4 percent of the past due payment.

  • What are the features of a high cost home loan?

  • Features of High-Cost Loans. A high-cost home loan exceeds one of two thresholds set by the federal government: the interest rate threshold or the point and fees threshold. The interest threshold for a first mortgage is a rate of 6.5 percentage points above the APOR.

  • What is the point and fees threshold for a high-cost mortgage?

  • For loans over $20,000, the point and fees threshold is 5 percent of the loan amount. The threshold for loans under $20,000 is the lesser of 8 percent of the loan amount or $1,000. There is one additional test for a high-cost mortgage related to any prepayment penalty.

  • What is a high-risk mortgage?

  • Subscribe to news about Home Loans. A high risk mortgage is a mortgage loan that falls outside of the normal scope of risk that lenders are used to. When you are dealing with a high risk mortgage, everything else that has to do with the loan changes. Your lender will have different programs for you and different options within those programs.

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