What is meant by "high-cost mortgage" under Regulation Z?

The term "high-cost mortgage" under Regulation Z specifically refers to loans that have interest rates or fees exceeding certain thresholds set forth in the regulation. Regulation Z aims to protect consumers by requiring lenders to furnish borrowers with essential information regarding the cost of credit, thereby ensuring that they are fully aware of any high-cost terms associated with a mortgage.

To qualify as a high-cost mortgage, the transition thresholds generally encompass, but are not limited to, scenarios where the annual percentage rate (APR) exceeds a specified percentage above the average prime offer rate or where the fees connected to the loan (such as points or other closing costs) surpass certain percentages of the loan amount. This classification is crucial for triggering additional disclosures and protections for borrowers, designed to prevent predatory lending practices.

In contrast, the other options describe different characteristics unrelated to the regulatory definition of high-cost mortgages, thus not addressing the specific criteria that categorize a mortgage as high-cost under Regulation Z.