What typically characterizes a high-cost loan in terms of fees?

A high-cost loan is typically characterized by fees that exceed set thresholds established by regulatory guidelines, such as those specified in the Home Ownership and Equity Protection Act (HOEPA). These thresholds are designed to identify loans that may impose higher risks to borrowers due to elevated costs associated with the loan, including points, origination fees, and other charges.

The identification of loans as “high-cost” serves as a warning to consumers that they may be paying more than what is customary for similar loan products in the market. By having specific fee limits, regulatory authorities aim to protect consumers from predatory lending practices that can lead to unsustainable debt.

In contrast, characteristics such as low closing costs, no application fees, or standard origination fees indicate a more consumer-friendly lending environment and are not representative of high-cost loans. High-cost loans often come with the burden of additional or excessive fees that may not be present in more standard loan products.