The Points & Fees Test thresholds used to determine whether a loan is a High Cost Mortgage (HCM) will increase on January 1, 2015. A loan will be considered a HCM if:
• The loan amount is at least $20,391 AND the points & fees exceed 5% of the total loan amount. This is up from $20,000 in 2014.
• The loan amount is less than $20,391 and the points & fees exceed the lesser of 8% of the total loan amount or $1,020. This is up from $1,000 in 2014.
As a reminder, there are 3 separate “tests” to determine HCM status (an APR test, a points & fees test and a prepayment penalty test) and if a loan meets the criteria of any one of the 3 tests, it is a HCM. The points and fees test is the only test where thresholds adjust annually.