The Real Estate Settlement Procedures Act (RESPA) is another consumer protection statute designed to stop lenders from charging illegal fees that make mortgages more expensive.

RESPA forces Lenders to provide borrowers with accurate disclosures of the closing costs, lender practices, and relationships among the companies that provide services before, during and after closing. RESPA also prohibits kickbacks and referrals fees. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property.

The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees. Since HOEPA’s enactment, refinances or home equity mortgage loans meeting any of HOEPA’s high-cost coverage tests have been subject to special disclosure requirements and restrictions on loan terms, and consumers with high-cost mortgages have had enhanced remedies for violations of the law.

Historically, these transactions have been referred to as “HOEPA loans” or “Section 32 loans.” People often refer to such transactions as “high-cost mortgages,” which is consistent with the terminology used in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and the 2013 HOEPA Rule.

In 2010, the Dodd-Frank Act amended TILA by expanding the scope of HOEPA coverage to include purchase-money mortgages and open-end credit plans (i.e., home equity lines of credit, or HELOCs) and amended HOEPA’s coverage tests. Transactions that may potentially be high-cost mortgages and thus must be tested against HOEPA’s coverage tests are referred to as transactions that are “subject to HOEPA coverage.”

The Dodd-Frank Act also added new protections for high-cost mortgages, including a requirement that consumers receive homeownership counseling before obtaining a high-cost mortgage. In January 2013, the Consumer Financial Protection Bureau issued a rule (referred to throughout this guide as the “2013 HOEPA Rule”) that amends TILA’s Regulation Z to implement the Dodd-Frank Act’s changes to HOEPA. The 2013 HOEPA Rule also implements two additional Dodd-Frank counseling requirements that may apply to creditors regardless of whether or not they make high-cost mortgages. Specifically, these provisions require or encourage consumers to obtain homeownership counseling for other types of loans.

Homeownership counseling-related requirements are not amendments to HOEPA, but are separate amendments to the Real Estate Settlement Procedures Act ’s (RESPA’s) Regulation X and the Truth in Lending Act ’s (TILA’s) Regulation Z that apply to different types of transactions. These requirements are covered separately. All the new requirements in the 2013 HOEPA Rule will apply to transactions for which you receive an application on or after January 10, 2014.

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