Term
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Definition
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Term
| What does HOEPA apply to? |
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Definition
| closed-end loans if those loans meet HOEPA's triggers for interest rates and points and fees. |
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Term
| What is the interest rate trigger for first-lien mortgages? |
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Definition
| 8 percentage points above the rate for comparable Treasury securities. |
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Term
| What is the interest rate trigger for subordinated liens (second mortgages). |
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Definition
| 10 percentage points above the comparable treasury rate. |
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Term
| Under HOEPA, what disclosures must the borrower receive 3 days prior to closing. |
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Definition
1. Amount borrowed, as it will appear on the face of the note.
2. An explicit statement of any credit insurance or debt-cancellation coverage included
3. Balloon amount due at the and of the loan, if any.
4. A notice that the borrower is not required to complete the transaction and that the loss of their home could occur if the loan payments are not met. |
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Term
| What predatory lending practices are prohibited under HOEPA? |
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Definition
1. Loan flipping.
2. Lending without due regard for a borrowers ability to repay the loan.
3. Direct payments to home improvement contractors.
4. Evading the provisions of HOEPA by documenting the loan as open-end credit. |
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Term
| What high cost home loan transactions does HOEPA prohibit? |
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Definition
1. Due on demand clauses.
2. Balloon payments.
3. Negative amortization
4. Advance payments
5. Increases in interest rate after default.
6. Prepayment penalties. |
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