The Consumer Financial Protection Bureau released three guides, outlining the Home Ownership and Equity Protection Act, the Equal Credit Opportunity Act and the Truth in Lending act Thursday.
The final rule of HOEPA was created to address abusive practices in refinancing and home-equity mortgage loans with high interest rates or high fees. The new final rule expands the universe of loans potentially covered by the act.
According to the CFPB, "Most types of mortgage loans secured by a consumer’s principal dwelling are potentially subject to HOEPA coverage."
However, the final rule includes exemptions from HOEPA coverage for reverse mortgages along with loans to finance the initial construction of a dwelling, loans originated and financed by housing finance agencies and loans originated through the United States Department of Agriculture’s Rural Housing Service section 502 Direct Loan Program.
The CFPB also outlined the ECOA, which covers requirements for furnishing copies of appraisals and other written valuations to applicants for first-lien loans secured by a dwelling.
Currently, according to the CFPB, "The ECOA prohibits lenders from discriminating on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), because all or part of an applicant’s income derives from public assistance, or because the applicant has in good faith exercised right under certain credit laws including the Truth in Lending Act."
Additionally, the CFPB issued TILA guidelines to ensure that full interior appraisals are conducted when consumers take out higher-priced (subprime) mortgage loans.
Plus, the term "higher-risk mortgage" has been replaced with HPML since the definitions are very familiar.
The CFPB said the new rule allows a creditor to extend HPML only if the following conditions are met: the creditor obtains a written appraisal, the appraisal is performed by a certified or licensed appraiser and the appraiser conducts a physical property visit of the interior of the property.
HOEPA will go into effect on January 10, 2014 and the ECOA and TILA rules will be enacted on January 18, 2014.
Outlines of these acts and other regulations can he found here.