On January 10, 2013, the Consumer Financial Protection Bureau (the “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 (the “Dodd-Frank Act” or “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.
Loans that meet HOEPA’s high-cost coverage tests are currently subject to special disclosure requirements and restrictions on loan terms. Borrowers in high-cost mortgages also have enhanced remedies for violations of the law. Purchasers and assignees of high cost mortgages, unlike acquirors of non-HOEPA loans, are subject to all claims and defenses that may be brought against the original creditor with respect to the mortgage, with certain limited exceptions. For these reasons, very few HOEPA loans are originated in today’s market. In fact, according to the Bureau...
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