What are the triggers for higher-priced lending?

The correct answer identifies specific fee thresholds for higher-priced lending, which is crucial for understanding when loans might be subjected to stricter regulations under federal law. Higher-priced loans are typically defined based on the difference between the annual percentage rate (APR) of the loan and the average prime offer rate (APOR) for similar loans. When the points and fees charged exceed certain thresholds, borrowers are entitled to additional protections.

In this case, the triggers for higher-priced lending mentioned in the correct answer reflect the standard thresholds used in regulatory discussions. While 1.5% on first mortgages and 3.5% on second mortgages are typical figures that indicate the boundary where higher-priced loan designations begin, understanding these figures is crucial for MLOs in their compliance and consumer protection responsibilities.

The other choices present different fee thresholds that do not align with the recognized figures for triggering higher-priced lending designations, leading them away from accurate compliance and borrower protection measures. It is essential for mortgage professionals to be knowledgeable about the correct thresholds to ensure they are in line with federal requirements and can advise borrowers appropriately.