What are the points and fees threshold for high-cost loans exceeding $20,000?

For high-cost loans that exceed $20,000, the threshold for points and fees is set at 5% of the total loan amount. This standard is established to protect borrowers from excessive fees and points that can be charged on high-cost mortgages.

When a loan meets certain criteria defined by federal regulations, including high-cost loan designations, lenders are restricted from charging points and fees above this threshold. The purpose of this regulation is to ensure that borrowers are not exploited by predatory lending practices and have a clearer understanding of the true cost of borrowing.

Therefore, setting the threshold at 5% allows for a balance between permitting lenders to recover necessary costs while also protecting consumers from unreasonably high expenses that could make repayment unmanageable. This regulation is part of the efforts to promote responsible lending and protect consumers' rights in the mortgage process.