What is the Home Ownership and Equity Protection Act?

The Home Ownership and Equity Protection Act (HOEPA) is a piece of federal law that was passed in 1994 in order to protect consumers who are considering taking out home equity loans in Texas and the rest of the U.S. HOEPA was created to ensure that lenders offer fair terms to borrowers when it comes to loan fees and repayment terms. Under HOEPA, any loan with an annual percentage rate (APR) that is 8 or more percentage points above the prime rate for a first mortgage loan, or 10 or more points above the prime rate for a second mortgage loan, is considered a “high-cost loan.” High-cost loans violate HOEPA’s guidelines and must fulfill the stringent conditions placed upon them by the act. These conditions include limiting the total points and fees that the consumer can be charged, allowing the consumer to cancel the loan without paying a penalty fee, providing a three-day right of rescission, and providing disclosure of relevant terms and fees before the loan is finalized. HOEPA also allows the consumer to sue the lender if they are deemed to have been charged unfair fees or terms. This act is very important for preventing predatory lending in Texas and the rest of the U.S., and provides consumers with additional protection when taking out a home equity loan.

Related FAQs

What is the Truth in Savings Act?
What is the Community Reinvestment Act?
What is banking law?
What is the Fair Lending Act?
What are the regulations surrounding banking?
What is the Right to Financial Privacy Act?
What laws protect personal banking information?
What is the Credit Repair Organizations Act?
What is the Garnishment Bank Act?
What is the Monetary Control Act?

What is the Home Ownership and Equity Protection Act?

Related FAQs

Related Blog Posts