4. Home Ownership and Equity Protection Act (HOEPA) coverage will be expanded in 2014. This rule expands protections for “high-cost mortgages” to include all closed-end mortgages as well as HELOCs.
In general terms, high-cost mortgages currently are those with APRs oft en 8% to 10% above the yield on Treasury securities having comparable maturity periods to the loan term, or have high points and fees.
Very few credit unions make any high-cost mortgages today. But this expansion of coverage to include HELOCs might subject more credit union mortgages to HOEPA’s additional disclosure requirements and limitations.
Moreover, the CFPB is considering a broader definition of “finance charge” and, if adopted, could mean more loans will be classified as high-cost loans unless adjustments are made to the rate triggers.
NEXT: Additional MLO requirements