Which of the following is NOT a condition for a loan to be considered HPML?

Which of the following is NOT a condition for a loan to be considered HPML?

• A. A 2.5 percentage point APR increase for first lien loans
• B. A 1.5 percentage point APR increase for first lien loans
• C. A 3.5 percentage point APR increase for subordinate lien loans
• D. A 1.0 percentage point increase for any lien type

Answer: (D)

For a loan to be classified as a Higher-Priced Mortgage Loan (HPML), specific thresholds regarding the Annual Percentage Rate (APR) in relation to the average prime offer rate (APOR) must be met. The conditions for identifying HPML loans include a 1.5 percentage point increase for first-lien loans and a 3.5 percentage point increase for subordinate lien loans. The option indicating a 1.0 percentage point increase for any lien type does not align with the established criteria for HPML. In fact, that particular threshold is below the minimum percentage increases set by Regulation Z, which are specifically designed to help ensure that consumers are protected from the risks associated with high-cost loans. Therefore, the 1.0 percentage point increase does not qualify as one of the conditions necessary for a loan to be considered HPML, making this the correct choice for the question asked.

For a loan to be classified as a Higher-Priced Mortgage Loan (HPML), specific thresholds regarding the Annual Percentage Rate (APR) in relation to the average prime offer rate (APOR) must be met. The conditions for identifying HPML loans include a 1.5 percentage point increase for first-lien loans and a 3.5 percentage point increase for subordinate lien loans.

The option indicating a 1.0 percentage point increase for any lien type does not align with the established criteria for HPML. In fact, that particular threshold is below the minimum percentage increases set by Regulation Z, which are specifically designed to help ensure that consumers are protected from the risks associated with high-cost loans. Therefore, the 1.0 percentage point increase does not qualify as one of the conditions necessary for a loan to be considered HPML, making this the correct choice for the question asked.