What types of loans are exempt from Hoepa?

What loan types are exempt from HOEPA rules?

The exemption for construction loans applies only to loans that finance the initial construction of a new dwelling. … As discussed above, HOEPA applies to most types of consumer credit transactions secured by a consumer’s principal dwelling. As a result, mortgages secured by vacation or second homes are not covered.

What loans are covered under HOEPA?

Under the 2013 HOEPA rule, most types of mortgage loans secured by a consumer’s principal dwelling1, including purchase money mortgages, refinances, closed-end home-equity loans, and open-end credit plans (i.e., home equity lines of credit (HELOCs), are potentially subject to HOEPA coverage.

Does HOEPA apply to HELOCs?

2.4 How does this rule apply to HELOCs? The 2013 HOEPA Rule extends HOEPA coverage to HELOCs. HELOCs will thus need to be analyzed under HOEPA’s coverage tests, and any HELOCs that are high-cost mortgages will be subject to most of the same requirements and restrictions as closed-end, high-cost mortgages.

What makes a loan a HOEPA loan?

A loan is covered by HOEPA if (1) the Annual Percentage Rate (APR) exceeds the rate for Treasury securities with a comparable maturity by more than ten percentage points, or (2) the points and fees paid by the consumer exceed the greater of eight percent of the loan amount or $480 (for 2002, adjusted annually based on …

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What loan types are exempt from ability to repay requirements?

In addition, loans by certain types of creditors or under certain loan programs are exempt from the rule’s ATR requirements: … Loans made by housing finance agencies directly to consumers; Loans made by other creditors under a program administered by a housing finance agency; and.

What are examples of Hoepa violations?

Practices Prohibited Under HOEPA

  • Mortgage brokers and lenders are prohibited from recommending a default on an existing loan to be once again financed by a high-cost mortgage.
  • Neither creditors, lenders, servicers, or brokers should charge a fee to modify, renew, defer, amend, or extend a high-cost mortgage.

What is an example of a covered loan?

Examples of Covered Loan in a sentence

Covered loan means a closed-end mortgage loan or an open-end line of credit that is not an excluded transaction under §1003.3(c). … Covered loan amount—closed-end mortgage loan. A financial institu- tion reports the covered loan amount that was approved.

What is a covered loan?

A covered loan includes a consumer loan secured by real property where the loan exceeds a specified annual percentage rate or a certain percentage of points and fees, as specified.

What is HOEPA coverage?

HOEPA, or the Home Ownership and Equity Protection Act, protects homeowners when they refinance or get home equity loans. The law attempts to prevent unfair practices from lenders who offer home equity loans.

What is a high-cost loan under HOEPA?

HOEPA provides certain protections for borrowers if they take out a high-cost mortgage. … A loan is considered high-cost if the borrower’s principal dwelling secures the loan and one of the following is true: The loan’s annual percentage rate (APR) exceeds a certain threshold.

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Does HOEPA apply to investment property?

The Home Ownership and Equity Protection Act (HOEPA) of 1994 defines high-cost mortgages. … It covers certain mortgage transactions that involve the borrower’s primary residence. The law does not apply to mortgage transactions that involve investment properties, commercial real estate or real estate purchases.

Which rules outline the regulations for HOEPA?

Main HOEPA rule provisions and official interpretations can be found in:

  • § 1024.20, List of homeownership counseling organizations.
  • § 1026.32, Requirements for high-cost mortgages.
  • § 1026.34, Prohibited acts or practices in connection with high-cost mortgages.