Homeownership & Equity Protection Act (HOEPA)

Question 1

A first-lien mortgage loan is covered under HOEPA (Section 32) if the loan’s APR exceeds the Average Prime Offer Rate (APOR) by more than __%.

Answer 1

6.5%

Question 2

The Average Prime Offer Rate (APOR) is used to determine if loan is a __________ or a ____________ loan.

Answer 2

Section 32 (High Cost) / Section 35 (High Priced)

Question 3

A loan will be considered a _______ loan if its APR exceeds the APOR by more than 6.5% for a first lien of $50,000 or higher, 8.5% on a first lien less than $50,000, and or 8.5% for a subordination lien.

Answer 3

High Cost (Section 32)

Question 4

A loan will be considered a Hight Cost (Section 32) loan if the points and fees exceed the following thresholds: __% of the loan amount for loans equal to or greater than $21,549 or __% of the total loan amount or $_____ for loan mounts less than $20,579.

Answer 4

5% / 8% /$1077

Question 5

A loan will be considered a High Priced (Section 35) loan if its APR exceeds the APOR by more than __%, __% for jumbo first-lien loans, and __% for subordinate liens.

Answer 5

1.5% / 2.5% / 3.5%

Question 6

HIGH-PRICED (Section 35) loans require the following 3 THINGS:

Answer 6

• Impound account for the first five years
• No prepayment penalty (unless it is limited to the first two years of the loan)
• The lender must verify the borrower’s ability to repay the loan

Question 7

HIGH-COST (Section 32) home loans have what 4 restrictions?

Answer 7

• Most balloon mortgages are prohibited
• Borrowers must prove an ability to repay the loan
• Prepayment penalties are strictly prohibited in high-cost loans
• The borrower must speak to a HUD-approved housing counselor