What is the HOEPA rule?

The 2013 HOEPA Rule requires that lenders provide applicants for federally-related mortgage loans with a written list of homeownership counseling organizations within three business days after the lender receives the application.

What is the main objective of HOEPA?

Overview. The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

What did HOEPA amend?

HOEPA amended the Truth in Lending Act (TILA) to address abusive practices in refinancing first mortgages and granting home equity mortgage loans with high interest rates or high fees. HOEPA permits consumers to obtain damages for and void loans that include prohibited finance charges and fees.

What triggers a HOEPA loan?

A loan is covered by HOEPA if (1) the Annual Percentage Rate (APR) exceeds the rate for Treasury securities with a comparable maturity by more than ten percentage points, or (2) the points and fees paid by the consumer exceed the greater of eight percent of the loan amount or $480 (for 2002, adjusted annually based on …

What does HOEPA stand for?

Home Ownership and Equity Protection Act
1. Introduction. The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

What is not allowed under Hoepa?

Balloon payments are generally banned, unless they are to account for the seasonal or irregular income of the borrower, they are part of a short-term bridge loan (12 months or less), or they are made by small creditors (less than $2 billion in assets5 and originating fewer than 2,000 loans per year, excluding portfolio …

What does Hoepa stand for?

How do you know if you have a high-cost loan?

In general, for a first-lien mortgage, a loan is “higher-priced” if its APR exceeds the APOR by 1.5 percent or more. For a subordinate mortgage, a loan is “higher-priced” if its APR exceeds the APOR by 3.5 percent.

What is Hoepa disclosure?

HOEPA protects consumers from deceptive and unfair practices in home equity lending by establishing specific disclosure requirements for certain mortgages that have high rates of interest or assess high fees and points.

What is a Hoepa loan?

If you decide to take out a “high-cost home mortgage,” a kind of loan where the interest rate or fees exceed certain amounts, the Home Ownership and Equity Protection Act (HOEPA) provides you with protections against abusive lending practices by restricting loan terms and features.

What does a 2 1 5 arm mean?

Interest Rates Are Usually Capped In our example, the 5/1 ARM has 2/2/5 caps. This means that at the first adjustment, the interest rate cannot go up or down more than 2 percent. This means the interest rate will never change more than 5%, up or down, for the life of the loan.

What does HOEPA stand for in Consumer Protection Act?

Historically, these transactions have been referred to as “HOEPA loans” or “Section 32 loans.” This guide refers to such transactions as “high-cost mortgages,” which is consistent with the terminology used in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and the 2013 HOEPA Rule.

When does the 2013 HOEPA rule take effect?

2013 Home Ownership and Equity Protection Act (HOEPA) Rule The Bureau recently finalized changes to this rule. The revisions amend the final rule issued January 10, 2013, which is set to take effect on January 10, 2014. The Bureau plans to update this guide as appropriate. In addition, the Bureau issued a

When did HOEPA update small entity Compliance Guide?

On November 16, 2018, the Bureau updated the small entity compliance guide to reflect changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act. Browse HOEPA final and interpretive rules to see specific amendments made by each final rule to Regulations Z and X.

When was the home ownership and Equity Protection Act ( HOEPA ) enacted?

Introduction The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

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