What is considered a 'high-cost loan' based on the federal legislation?

A 'high-cost loan' is defined based on specific thresholds outlined in federal legislation, particularly under the Home Ownership and Equity Protection Act (HOEPA). This legislation specifies that loans are classified as high-cost if they exceed certain annual percentage rate (APR) thresholds, which are determined by comparing the APR of the loan to the yield on certain U.S. Treasury securities.

This classification is important because high-cost loans typically come with additional regulations intended to protect consumers from predatory lending practices. These protections apply to loans where the total points and fees exceed a specified limit as well.

In contrast, simply being above average market rates does not inherently classify a loan as high-cost, nor do personal loans or loans secured by personal property meet the criteria for high-cost loans under the specific definitions provided in HOEPA. The focus is on the APR in relation to set thresholds, making it a distinct measure for identifying high-cost loans.