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HOEPA/part of TILA

Description

HOEPA
andrea.browne
Mind Map by andrea.browne, updated more than 1 year ago
andrea.browne
Created by andrea.browne over 6 years ago
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Resource summary

HOEPA/part of TILA
  1. Home Ownership and Equity Protection Act
    1. Sometimes referred to as Section 32 loans
      1. Exempt from the provisions of HOEPA
        1. Reverse Mortgage Loans, Loans used to finance the initial construction of a dwelling, Loans originated by a housing finance agency is the creditor, Loans originated by the USDA
        2. HOEPA also regulates Appraisal Practices
      2. Applies to High-Cost Mortgages
        1. APR Threshold, which differs for first-lien and sobordinate-lien mortgages
          1. A points and fees threshold
            1. A prepayment penalty threshold
              1. Above the average prime offer rate for a comparable transaction
                1. Thresholds for loans of $20,391 or more: The threshold is triggered if the points and fees exceed 5% of the loan amount
                  1. Threshold for loans of less than @20,391: The threshold is triggered if the points and fees exceed the lesser of 8% of the total loan amoun or $1,020
                2. First-lien mortgages: A first lein home loan is a high cost mortgage if APR is 6.5
                  1. a subordinate-lien mortgages: a subordinate-lien home loan is a high-cost mortgage if its APR is 8.5 percentage points above the average prime offer rate for a comparable transaction
                3. Special HOEPA disclosure, HOEPA loans must include a special disclosure that states: You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could use your home, and any money you have put into it, if you do not meet your obligations under the loan.
                  1. Recipients fo the disclosure: Any consumer who is primarily liable on the obligation, Those with a right to rescind the transaction
                    1. Due 3 business days prior to the comsummation
                    2. Consumers must complete counseling with a HUD approved counselor, creditors are allowed to pay counseling fees
                    3. Ability to Repay Rule is required to comply with HOEPA
                      1. For open ended loans there is a presumption of complience
                      2. Prohibited Lending Terms: Ballon Payments, Negative amortization, advance payments, increased interest rates after default, Improperly calculated rebates, prepayment penalties, acceleration of debt
                        1. Prohibited lending practices: Direct payments to home improvement contractors, loan flipping, financing points and fees, lending without regard to repayment ability, lending without pre-loan counseling, and recommending default, charging loan modification or dererral fees, charging late fees, and charging fees for payoff statements
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