What does HPML stand for in the context of Regulation Z?

In the context of Regulation Z, HPML stands for High Price Mortgage Loan. This designation is used to identify loans that exceed certain interest rate thresholds compared to average rates determined by the Federal Reserve. Specifically, a mortgage loan is considered a High Price Mortgage Loan if the annual percentage rate (APR) exceeds the average prime offer rate (APOR) by a specific margin.

Identifying HPMLs is crucial because these loans often come with heightened risks for the borrower, including potential pitfalls related to predatory lending practices. The regulation includes additional protections for consumers who take out HPMLs, such as requiring creditors to provide more comprehensive disclosures and to evaluate the borrower's ability to repay the loan, thereby promoting responsible lending practices.

Understanding HPML assists borrowers and lenders alike in recognizing the implications of the loan terms and ensures borrowers are adequately informed about the associated financial obligations.