A first lien mortgage secured by a principal dwelling that is $50,000 or more meets the APR test if the APR exceeds the average prime offer rate (APOR) by how many percentage points or more?

The correct answer is that a first lien mortgage secured by a principal dwelling that is $50,000 or more meets the APR test if the APR exceeds the average prime offer rate (APOR) by 6.5 percentage points or more. This threshold is established under the Truth in Lending Act (TILA) regulations that govern mortgage transactions, particularly those that require additional disclosures associated with higher-priced mortgage loans.

When a mortgage exceeds this 6.5 percentage point threshold, it is deemed a higher-priced mortgage loan (HPML), which triggers specific compliance requirements for lenders, such as enhanced disclosure obligations and additional protections for borrowers. This is designed to ensure transparency and protect consumers from potentially predatory lending practices.

Understanding this threshold is critical for professionals in the mortgage lending field, as it impacts compliance processes and the way products are presented to consumers.