Home Ownership and Equity Protection Act

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Home Ownership and Equity Protection Act (HOEPA)

The Home Ownership and Equity Protection Act (HOEPA) of 1994 amends the Truth in Lending Act.

High Rate, High Fee Loans
The Home Ownership and Equity Protection Act (HOEPA) may give you additional rights if your loan is a home equity loan, second mortgage or refinance secured by your principal residence and if:

The loan's APR exceeds by more than 10% the rate on a Treasury note of comparable maturity
The total fees and points at or before closing exceed the larger of 441 dollars or 8% of the total loan amount. (The 441 dollar figure is for 1999 and is adjusted annually)

If The Home Ownership and Equity Protection Act (HOEPA) Applies:

A lender may not engage in a pattern or practice of lending based on home equity without regard to the borrower's ability to repay the loan.
You must get certain disclosures from the lender at least three business days before closing.
Your lender cannot make a direct payment to a home improvement contractor.
Certain loan terms are illegal, such as most prepayment penalties and increased interest rates at default.
In most situations, your loan cannot have a balloon payment due in less than five years.

A high rate or high fee loan might be right for you, but be aware of the risks. These loans are extremely expensive ways to get money. You could lose your home if you can't make the payments.

Where to Complain
If you think your lender has violated the law or you want information about a right to rescind, contact a private attorney or the Federal Trade Commission (FTC).

You can file a complaint with the FTC by contacting the Consumer Response Center:
By Telelphone:
Toll Free 1-877-FTC-HELP (1-877-382-4357)
TDD: 202-326-2502

By Mail:
Consumer Response Center
Federal Trade Commission
600 Pennsylvania Ave, NW
Washington, DC 20580

Through the Internet
Use the online complaint form.
Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.

For More Information
The American Association of Retired Persons has information about predatory lending. You can access information
By Telephone:
1-800-424-3410
By Mail:
AARP
601 E Street, NW
Washington, DC 20049
Or on the web.

For more information on federal credit regulations and consumer rights go to the Federal Trade Commission (FTC) website at www.ftc.gov or www.federalreserve.gov
Some state laws may provide you with additional rights. For information go to the website of the National Association of Attorneys General (NAAG) at www.naag.org.

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