The Points & Fees Test thresholds used to determine whether a loan is a High Cost Mortgage (HCM) will decrease for 2016. A loan is considered a HCM if:
• The loan amount is at least $20,350 AND the points & fees exceed 5% of the total loan amount. This is down from the 2015 amount of $20,391.
• The loan amount is less than $20,350 and the points & fees exceed the lesser of 8% of the total loan amount or $1,017. This is down from the 2015 amount of $1,020.
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.