What is the Home Ownership and Equity Protection Act?
The Home Ownership and Equity Protection Act (HOEPA) is a federal law that regulates certain practices in the subprime mortgage market in the state of Georgia. It’s also known as the High-Cost Mortgage and Home Equity Loan Consumer Protection Act of 1994. HOEPA was signed into law in 1994, primarily to protect consumers who are at risk of predatory lending in the subprime mortgage market. It does this by introducing regulations for lenders, such as setting limits on interest rates, origination fees, and other fees. Additionally, HOEPA prevents lenders from making loans to consumers who cannot afford them, by requiring lenders to verify consumers’ ability to repay the loan. HOEPA is meant to ensure that high-interest, high-cost loans (such as subprime mortgages) come with certain consumer protections. In particular, it requires lenders to provide borrowers with full disclosure of all terms of the loan, including all costs and fees. It also requires lenders to offer a “right to rescind”, meaning that the borrower can cancel the loan within three days of closing. HOEPA is an important law that protects consumers in the state of Georgia by regulating the subprime mortgage market. It prevents lenders from issuing loans to consumers who cannot afford them and ensures that borrowers are provided with important information regarding the terms of the loan. By doing this, HOEPA helps protect consumers from predatory lenders who take advantage of them by offering high-cost, high-interest loans.
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