What is the Homeowner’s Protection Act?

The Homeowner’s Protection Act (HPA) is a federal law that protects homeowners from certain mortgage unethical practices. It was enacted in 1998 as a way to protect homeowners in the event of a foreclosure or if they choose to refinance their mortgage. The HPA only applies to certain types of mortgages, such as those that are held by Fannie Mae or Freddie Mac and those that have been originated by a mortgage lender. These types of mortgages have a 15-year limit, which means the owner of the mortgage must be protected for at least 15 years. Under the HPA, lenders must provide borrowers with certain disclosure documents prior to the closing of the loan. These documents must include a statement that the borrower likely does not have to pay private mortgage insurance (PMI) if the loan-to-value ratio is less than 80 percent. The lender must also notify the borrower about the PMI cancelation requirements, or when the borrower can request the PMI to be cancelled. Lenders are responsible for providing information to borrowers about how to avoid foreclosure if they are facing financial difficulties. The HPA protects borrowers from lenders who do not willingly work to help the borrower keep their home. In Nebraska, the Homeowner’s Protection Act is regulated by the Mortgage Bankers Association. They oversee all aspects of the law, ensuring that all mortgage lenders comply with the regulations. Homeowners in Nebraska should contact this association for more information about the HPA and their rights as a borrower.

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