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Volume 2, Issue 2, 2002   Federal Reserve Bank of Dallas

Determining Coverage Under HOEPA

The Home Ownership Equity Protection Act (HOEPA) identifies a class of high-cost home equity loans through rate and fee triggers.

The regulation that implements HOEPA, Regulation Z, has undergone several changes, including how creditors determine if a loan is covered under the act. Compliance with the expanded HOEPA rules is mandatory as of Oct. 1, 2002.

Coverage under HOEPA will be determined in two ways:

  1. if the APR on a first-lien closed-end home equity loan exceeds the yield of a Treasury security with a comparable maturity by more than 8 percentage points (must exceed 10 percentage points if a subordinate lien), or
  2. if the points and fees the consumer pays at or before closing exceed the greater of $480 or 8 percent of the total loan amount.

See how the changes to Regulation Z affect high-cost home equity loans:

Full text of changes to Regulation Z:


e-Perspectives, Volume 2, Issue 2, 2002

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The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.

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