How do I know if my loan is a HOEPA loan?

A forensic loan audit is the most reliable way to determine HOEPA status. Your original loan documents — particularly the Truth in Lending disclosure and HUD-1 Settlement Statement — will show the APR, points, and fees. Compare these to the APOR at the time of your loan to determine if HOEPA triggers were met.

Can HOEPA violations stop a foreclosure?

Yes. HOEPA violations provide grounds for loan rescission, affirmative defenses in foreclosure, and counterclaims for damages. The presence of HOEPA violations significantly strengthens your position in negotiations with the lender and can support a TRO to halt the foreclosure sale.

How does HOEPA differ from TILA?

HOEPA is an amendment to TILA specifically targeting high-cost loans. While TILA applies to all consumer credit transactions, HOEPA only applies when the loan meets the high-cost threshold tests. HOEPA provides additional protections beyond TILA — including restrictions on loan terms and enhanced disclosure requirements.

How do I know if my loan is a HOEPA loan?

A forensic loan audit is the most reliable way. Your original loan documents will show the APR, points, and fees. Compare to the APOR at the time of your loan to determine if HOEPA triggers were met.

Can HOEPA violations stop a foreclosure?

Yes. HOEPA violations provide grounds for loan rescission, affirmative defenses in foreclosure, and counterclaims for damages. They significantly strengthen your position in negotiations.

How does HOEPA differ from TILA?

HOEPA is an amendment to TILA specifically targeting high-cost loans. While TILA applies to all consumer credit transactions, HOEPA only applies when the loan meets high-cost threshold tests with additional protections.

HOEPA Violations Guide - Home Ownership & Equity Protection Act

What Is HOEPA?

The Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C. § 1639, is an amendment to TILA that provides special protections for borrowers with high-cost mortgage loans. A loan is "high-cost" under HOEPA if its APR exceeds certain thresholds or if points and fees exceed specified percentages. HOEPA imposes strict disclosure requirements and prohibits certain predatory loan terms.

HOEPA Trigger Thresholds (2024)

First-lien loans: APR exceeds the Average Prime Offer Rate (APOR) by 6.5+ percentage points, OR points and fees exceed 5% of total loan amount. Second-lien loans: APR exceeds APOR by 8.5+ percentage points. If your loan meets these triggers, HOEPA protections apply.

Prohibited Terms in HOEPA Loans

Balloon Payments

HOEPA generally prohibits balloon payments on loans with terms less than 5 years. Certain exceptions exist for bridge loans and rural areas.

Negative Amortization

Loans where the payment does not cover interest — causing the balance to grow — are prohibited under HOEPA.

Prepayment Penalties

HOEPA restricts or prohibits prepayment penalties on high-cost loans, with limited exceptions.

Default Interest Rates

HOEPA prohibits higher interest rates triggered solely by default — a common feature of predatory loans.

HOEPA in Foreclosure Defense

If your loan violates HOEPA, you may have the right to rescind the loan (similar to TILA but with an extended period in some cases), recover statutory damages, and assert HOEPA violations as an affirmative defense in foreclosure. HOEPA violations can also form the basis for a wrongful foreclosure claim if the lender is foreclosing on an illegal loan.

HOEPA Violations: High-Cost Mortgage Protections