The Home Owners Equity Protection Act (HOEPA) establishes the "annual prime offer rate" (APOR). What percentage does the APR need to exceed for a first lien greater than $50,000 to be considered a high cost loan?

The correct answer is based on the standards set forth in the Home Ownership Equity Protection Act (HOEPA) regarding high-cost loans. In this context, for a first lien mortgage that exceeds $50,000, a loan is classified as a high-cost loan if its annual percentage rate (APR) exceeds 6.5% of the annual prime offer rate (APOR).

HOEPA aims to protect consumers against predatory lending practices by establishing certain thresholds that indicate when a loan's terms may be considered excessively high or exploitative. The significance of the 6.5% threshold is rooted in its role in signaling potentially problematic loan structures, ensuring that borrowers are aware of higher costs associated with their loans.

Understanding the implications of this threshold is crucial for mortgage loan officers as it influences the strategies they adopt when offering loans and serving clients, particularly in terms of compliance with federal regulations aimed at consumer protection.