What is HOEPA and which loans fall under its protections?

• A. HOEPA provides additional protections for high-cost mortgages.
• B. HOEPA applies to all government loans.
• C. HOEPA imposes rate caps on all loans.
• D. HOEPA is a tax credit program.

Answer: (A)

HOEPA is a part of the Truth in Lending Act that adds protections specifically for high-cost mortgages. It targets loans that exceed certain cost thresholds, such as when the loan’s APR is much higher than the market rate or when the points and fees are above a set portion of the loan amount. When a loan meets these triggers, it becomes subject to HOEPA protections, which include enhanced disclosures and restrictions on certain loan terms (for example, limits on balloon payments, negative amortization, and prepayment penalties).

So, loans that fall under HOEPA protections are those that are considered high-cost according to these triggers, not all government loans, not a blanket rate-cap on every loan, and not a tax credit program.