A mortgage has an APR of 9.2% when the average prime offer rate for comparable transactions is 6.5%. The loan amount is $95,000 with points and fees of $4,200. Is this loan subject to HOEPA?
Correct Answer
C) Yes, due to both triggers being exceeded
The loan exceeds both HOEPA triggers: (1) APR trigger - 9.2% exceeds 6.5% + 6.5% = 13% for loans under $100,000, and (2) Points and fees trigger - $4,200 exceeds 5% of $95,000 ($4,750) but also exceeds $1,000 for loans under $100,000.
Why This Is the Correct Answer
The loan exceeds both HOEPA triggers: (1) APR trigger - 9.2% exceeds 6.5% + 6.5% = 13% for loans under $100,000, and (2) Points and fees trigger - $4,200 exceeds 5% of $95,000 ($4,750) but also exceeds $1,000 for loans under $100,000.
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