A first lien mortgage loan is covered under HOEPA if the loan's APR exceeds the average prime offer rate by how much?

The Home Ownership and Equity Protection Act (HOEPA) was enacted to protect consumers from predatory lending practices. A first lien mortgage loan is considered covered under HOEPA if its Annual Percentage Rate (APR) exceeds the average prime offer rate by a specified margin. In the context of this question, the threshold that applies is 6.5%.

This means that if the APR of a first lien mortgage loan is 6.5% or more above the average prime offer rate, the loan triggers HOEPA protections. These protections involve specific disclosure requirements, limitations on terms, and other borrower rights to ensure that potential borrowers are well-informed and not subjected to exploitative loan conditions. Understanding this margin is crucial for anyone involved in originating or servicing loans, as it determines the applicability of additional regulations aimed at safeguarding borrowers.