Chicago Relocation

Home Ownership Equity Protection Act (HOEPA)

August 17, 2009

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James Waller, shared some comments on HOEPA– Home Ownership Equity Protection Act.  James is currently pursuing a real estate degree at DePaul University in Chicago IL.  He can be reached at .  As always, it’s best to stay informed by using a strong, secure mortgage lender.


On July 14, 2008 the Board of Governors for the Federal Reserve released new rules under the Truth in Lending Act (T.I.L.A.) Regulation-Z. This law helps to protect consumers from deceptive practices made by lenders towards mortgages and home equity loans. If the lender does not supply the obligatory disclosures or terminates the loan in less than three days, then the borrower has the right to take legal action and may be able to receive compensation for damages, legal fees and get the loan reinstated. H.O.E.P.A. is applied to all lenders and not just federally –regulated banks. 

The guidelines illustrate how we are shielded by creating a new category of “higher-priced mortgage loans.” It is defined as closed-end consumer credit transactions secured by the consumer’s principal dwelling. The Annual Percentage Rate (APR) on the loan will exceed the rate on a Treasury security with a comparable maturity by 3%. This shall include purchase loans, refinancing of loans, and home equity loans. Yet, this will exclude loans for vacation properties, open-end home-equity plans, reverse mortgages, or construction-only loans.

 Furthermore, this legislation implements early consumer disclosures for closed end mortgages secured by a principal dwelling. Certain prohibitions include acts or practices for subprime mortgage loans and loans that meet HOEPA’s cost triggers. Additional acts or practices for closed-end credit transactions attained by a consumer’s principal residence. Also, misleading advertising practices in relation to closed-end mortgages.


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