A borrower in New Jersey receives a mortgage loan with an interest rate of 8.5% when the average prime offer rate is 4.2%. The loan also includes $4,500 in points and fees on a $150,000 loan amount. How should this loan be classified under New Jersey anti-predatory lending provisions?
Correct Answer
B) High-cost mortgage subject to anti-predatory protections
With an APR spread of 4.3 percentage points (8.5% - 4.2%) and points/fees of 3% ($4,500/$150,000), this loan likely qualifies as high-cost under New Jersey provisions, triggering anti-predatory protections.
Why This Is the Correct Answer
With an APR spread of 4.3 percentage points (8.5% - 4.2%) and points/fees of 3% ($4,500/$150,000), this loan likely qualifies as high-cost under New Jersey provisions, triggering anti-predatory protections.
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