Which of the following provides criteria to define high-cost loans?

Federal law outlines specific criteria to define high-cost loans, primarily through the Home Ownership and Equity Protection Act (HOEPA). This law establishes thresholds for the interest rates and fees that categorize a loan as high-cost, aiming to protect consumers from predatory lending practices. The defining criteria include metrics like the annual percentage rate (APR) compared to the average prime offer rate and the total points and fees charged in relation to the loan amount. By establishing these uniform standards, federal law ensures that borrowers have clear protections against excessively expensive loans that could lead to financial hardship.

State legislation may also address high-cost loans but often aligns with or supplements federal guidelines. Bank policies and real estate regulations may establish additional internal standards or guidelines that any given institution or local market might adopt, but ultimately, the definition of high-cost loans is anchored in federal law for consistency across the nation. This comprehensive framework helps consumers understand what constitutes a high-cost loan, thereby facilitating informed borrowing decisions.