Home equity protection act Flashcards
What does HOEPA do?
Deals with high cost mortgages - tells you how much is too much
What must you give to borrowers on a high cost mortgage?
- Additional disclosures 3 days prior to closing
- Avoid certain loan terms
- homeownership counseling
3 types of loans that require homeownership counseling
- HECM (reverse(
- First time buyer accepting a neg Am loan
- High cost home loan
Why does a loan become high cost?
- points and fees trigger - 5% on loans 20k or more
- APR trigger - 6.5 % over APOR
- Prepayment penalty of longer then 3 years
Within how many days do you send a high cost mortgage disclosure for a high cost mortgage
3 days
What is prohibited for a high cost mortgage?
- balloon payment loans, negative am, prepayment penalties and acceleration clauses
What is mortgage acceleration?
Paying off a mortgage faster then required by the terms of the mortgage agreement
Each of the following statements is correct regarding High Cost (section 32) loans, EXCEPT:
a. Negative amortization is prohibited
b. The interest rate of the loan cannot be increased if the loan goes into default
c. Balloon payments are prohibited for loans of less than five years (except for bridge loans)
d. Second homes and investment properties are not exempt from HOEPA
D.
True or False, high cost loans are only applicable to primary residences?
True.
What is a high priced mortgage loan?
A loan that has an apr that exceeds the APOR BY 1% on 1st mortgage,2.5 on jumbo, and 3.5 on second mortgage
Do high priced loans need appraisal and interior inspection?
Yes
Higher-Priced Mortgage Loans must have an Escrow account except when?
a.) A 2nd Appraisal is completed
b.) It’s an FHA loan
c.) If the down payment exceeds a certain amount
d.) It’s a construction loan
D.
