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HOEPA (Home Ownership and Equity Protection Act) is a law that regulates high cost loans.
HOEPA applies to most home equity and refinance loans secured by the borrower's home. There are 2 main parts to HOEPA: 1) the Annual Percentage Rate (APR) and points and fees threshold that show when a specific high cost loan is subject to the law, and 2) certain prohibitions and restrictions that are placed on high cost loans covered by the law.
Loans with an APR of 10% above the Treasury rate, or loans with points and fees that total more than 8% of the loan amount are subject to HOEPA. The law has very specific definitions of points and fees, so that not all points and fees are included in the 8% trigger. There are two significant changes in the current FRB proposal. One is the lowering of the APR threshold to 8% above the Treasury rate, or about 14% at today's rate, which will capture more high cost loans under HOEPA's protections. Two, the proposal seeks to include the costs of optional credit insurance products in the points and fees test, which will lead to more loans being covered by HOEPA, and possibly even to lenders halting sales of this expensive and abusive product which has come to symbolize predatory lending. Yet the FRB has the authority to outlaw practices that are particularly abusive and deceptive. The FRB should go further than it proposes, and outlaw outright the sale of credit life insurance and other similar credit products, as well as mandatory arbitration provisions which deny equal access to justice to low income and minority borrowers.
The legal right to void or cancel your mortgage contract in such a way as to treat the contract as if it never existed. Right of rescission is not applicable to mortgages made to purchase a home, but may be applicable to other mortgages, such as home equity loans.