Points and fees cannot be financed, excluding finance closing charges. Lender must receive written certification that the consumer has received homeownership counseling from an agency on the HUD-approved housing counseling list found at consumerfinance. The homeownership counselor cannot be affiliated with or employed by the lender. Lenders cannot steer the consumer to a particular counseling agency. The homeowner counseling organization list must contain:. Counseling cannot begin until the consumer has received their RESPA loan estimate or the disclosures required, which will be verified with the counselor.
High-cost mortgage disclosures are required to be provided at least 3 business days before closing. Counseling may be provided via telephone. Written certificate may be sent by counselor via mail, email or facsimile so long as the certificate is in retainable form.
Lenders may pay the counseling fee, but cannot condition payment on the consumer getting a high-cost loan. Consumers may also pay the counseling fee. All the key compliance information you need to know is condensed into this short outline for quick reading. To comply with high-cost mortgage provisions of this rule you must: Give additional disclosures Avoid certain loan terms Ensure the consumer receives additional protections including homeownership counseling Creditors must provide a list of homeownership counseling organizations within 3 days of application, and confirm that the consumer received homeownership counseling.
The following items are included in calculating points and fees for HOEPA coverage: Closed-end credit transactions Open-end credit plans HELOCs Participating fees payable at or before account opening Fees charged to draw on their HELOCs Point and fees calculation Finance charge Loan Originator Compensation and Comments Compensation can be paid by creditor to a mortgage broker, by consumer or creditor to a manufactured home retailer, or included in the sales price of a manufactured home through: Real estate-related fees Premiums for credit insurance; credit property insurance; other life, accident, health or loss-of-income insurance where the creditor is beneficiary Maximum prepayment penalty Prepayment penalty paid in a refinance HOEPA Rules Regulating Prepayment Penalties HOEPA prohibits prepayment penalties for high-cost mortgages.
Specifically, these provisions require or encourage consumers to obtain homeownership counseling for other types of loans. These requirements are covered separately. All the new requirements in the HOEPA Rule will apply to transactions for which you receive an application on or after January 10, Short Sale. Home Owners Equity Protection Act. Also, be aware that additional steps are often required in the foreclosure of a high-cost home loan. To find out if your state has any laws that affect the foreclosure of a high-cost home loan, talk to a foreclosure lawyer.
The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.
Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. Protections for High-Cost Mortgages. HOEPA imposes additional requirements on lenders and gives consumers specific remedies for violations.
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. The amount of points and fees paid in connection with the transaction exceed a certain threshold.
The prepayment penalties the lender charges under the loan or credit agreement exceed a certain amount or can be charged after a certain time period. A loan is considered a high-cost mortgage if its APR as of the date the interest rate is set exceeds the Average Prime Offer Rate an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms for a comparable transaction on that date by more than: 6.
These figures are adjusted annually. If the loan is indeed a high-cost mortgage, a prepayment penalty is not allowed.
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