TILA—Home Ownership & Equity Protection Act (HOEPA)

Question 1

HOEPA stands for what and is under what greater law?

Answer 1

Home Ownership and Equity Protection Act; and its under TILA.

Question 2

What is the purpose of HOEPA?

Answer 2

1. ) To establish disclosure requirements & prohibits deceptive & unfair practices in lending.
2. ) Establishes requirements for loans with high interest rates and/or fees.

Question 3

What cannot be included in HOEPA loans?

Answer 3

1. ) Balloon payment.
2. ) negative Amortization.
3. ) Prepayment penalty.

Question 4

All HOEPA loans are under TILA, what are the two sections of loans within HOEPA that MLOs need to know?

Answer 4

1. ) Section 32-High Cost Loans.

2. ) Secton 35-Higher Priced Loans.

Question 5

(HOEPA) For a loan to be considered a Section 32 loan, it must meet one of three triggers—what are they?

Answer 5

1. ) The APR exceeds the APOR (Average Prime Offer Rate) by 6.5% on 1st lien loans of $50,000 or higher, or 8.5% of less than $50,000.
2. ) When the APR exceeds the APOR by more than 8.5% on the second lien loans.
3. ) If total fees charged exceed 5 points/5% of the total loan amount.

Question 6

(HOEPA) For a loan to be considered a Section 35 loan, it must meet one of three triggers—what are they?

Answer 6

If the Loan exceeds the APOR by:

1. ) 1.5% for the 1st Mort. Lien.
2. ) 2.5% for a 1st lien Jumbo Loan (Loan amount over $417,000).
3. ) 3.5% for a Subordinate Mort. Lien.