Section 4 Unit 5 Lesson 3 Introduction to HOEPA

Question 1

HOEPA

Answer 1

Predatory Lending and HOEPA
Home Ownership and Equity Protection Act focuses on predatory practices and includes requirements of high interest rates or high fees

It is also referred as Section 32

Question 2

HOEPA Coverage

Answer 2

Purchase Money mortgages
Refinances
Closed end Home Equity Loans
Open ended credit plans e.g (HELOCs)

Question 3

What are the loans exempt from HOEPA

Answer 3

Reverse Mortgage
Construction loans
Loans originated and directly finances by a housing finance agency (HFA)
Loans originated under the US Department of Agriculture (USDA) Rural development loan program
Mortgage secured as vacations or second homes

Question 4

Is it a High Cost Mortgage - APR

Answer 4

1. First take a look at APr
2. Average prime offer rate (APOR) which is survey-based estimate of APRS currently offered on prime mortgage loans.
3. Does the APR exceeds the APOR for comparable transactions more than
   6.5 % point for first-lien transaction
   8.5 percentage points for a first lien for less than $50000 that’s secured by personal property (House boat or RV)
   8.5 percetnage points for junior lien transactions

If the answer is YES, then it’s high cost loan