For what reasons typically might a loan be considered high-cost?

A loan is typically considered high-cost when it has high points and fees or interest rates. This designation is based on the federal requirements set forth by the Home Ownership and Equity Protection Act (HOEPA), which identifies loans that exceed certain thresholds for annual percentage rates (APRs) or total points and fees charged. When a loan's cost exceeds standard limits, it may carry additional risks for borrowers, often due to their financial status or specific market conditions.

High points and fees indicate not just a higher cost of borrowing but may also point to risks associated with the loan itself, including the potential for predatory lending practices. This classification serves to protect consumers by imposing additional disclosures and regulations on lenders offering such loans.

Other aspects, like a borrower’s low credit score or high loan amounts, can influence the cost of loans or terms but do not necessarily classify a loan as high-cost in the same regulatory context. Similarly, low property values can impact lending decisions but are not a direct determinant of high-cost loans. Therefore, while these factors can contribute to the overall perception of loan affordability, it is the specific criteria related to points and fees or interest rates that define a loan as high-cost under the law.