Special Alert: Detailed Analysis of CFPB's High-Cost Mortgage Rule
January 25, 2013
On January 10, 2013, the Consumer Financial Protection Bureau issued a final rule (the "Rule") that amends Regulation Z (Truth in Lending) to implement changes to the Home Ownership and Equity Protection Act ("HOEPA") made by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). The Rule expands the types of loans subject to HOEPA, revises the tests for whether a loan is "high-cost" and therefore subject to HOEPA, imposes new restrictions on high-cost loans, and requires new disclosures. Because of the special requirements for loans that meet HOEPA's high-cost tests, the HOEPA threshold has acted as a de facto usury ceiling for the vast majority of mortgage originators. With the Rule's extension of HOEPA to more types of loans, and the lowering of the HOEPA thresholds, this ceiling will now affect a broader segment of consumers seeking mortgage loans than before. The Rule also implements two additional Dodd-Frank provisions that are not amendments to HOEPA related to homeownership counseling.
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