What law identifies a loan as high cost if it exceeds the average prime offer rate by more than 6.5% for first lien loans over $50,000?

The Home Ownership Equity Protection Act (HOEPA) specifically addresses high-cost home loans and sets criteria for determining when a loan falls into this category. According to HOEPA, a loan is identified as high cost if its annual percentage rate (APR) exceeds the average prime offer rate by more than 6.5% for first lien loans that exceed $50,000. This law was established to protect consumers from predatory lending practices by ensuring that borrowers are fully informed about the terms of high-cost loans and the risks associated with them.

HOEPA requires lenders to disclose specific information to borrowers, such as the right to cancel the loan and restrictions on some high-cost loan practices. This consumer protection component is critical in helping prevent financial distress for borrowers who might otherwise take on loans that are unsustainable or that carry excessively high costs.

The other laws mentioned, such as the Home Mortgage Disclosure Act, the Homeowners Protection Act, and the Mortgage Assistance Relief Services, focus on different aspects of the mortgage lending process, such as disclosure requirements, private mortgage insurance cancellation, or relief services for struggling borrowers, but they do not specifically define high-cost loans in the manner that HOEPA does.