Final answer:
Closed-end loans that exceed the average prime offer rate but do not reach HOEPA trigger levels are known as Higher-priced mortgage loans. These loans are part of the broader category of subprime lending and have increased due to the securitization of mortgage loans, including the infamous NINJA loans.
Step-by-step explanation:
Closed-end loans with rates that exceed the average prime offer rate, yet are not high enough to trigger protections under the Home Ownership and Equity Protection Act (HOEPA), are known as b: Higher-priced mortgage loans. These are distinct from subprime mortgage loans, which are generally offered to borrowers with lower credit ratings and can carry higher interest rates to compensate for the increased risk of default. The landscape of mortgage lending changed significantly due to changes in finance and banking laws, leading to the securitization of mortgage loans and the rise of riskier lending practices, including NINJA loans — loans made to borrowers with no income, no job, or assets.