Which condition is usually associated with a Higher Priced Mortgage Loan (HPML)?

A Higher Priced Mortgage Loan (HPML) typically represents loans with interest rates that exceed a certain threshold in comparison to average market rates and are often considered to carry a higher level of risk for lenders. Because of this increased risk, HPMLs tend to involve higher fees associated with the loan. These fees can include things like closing costs, origination fees, and other charges that reflect the loan's higher risk profile.

High fees are an essential consideration for borrowers because they can significantly affect the overall cost of the loan. By contrast, other options, such as lower documentation requirements or the concept of permanent financing options only, do not directly relate to the definition of HPML. The emphasis on increased fees aligns perfectly with the intention of HPML regulations, which govern loans that exceed certain pricing thresholds, ensuring that lenders adequately disclose the costs associated with these higher risk loans to protect consumers.