Balloon Loans and HOEPA Terms - David Dickinson

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Balloon Loans and HOEPA Terms
by David Dickinson, BOL Guru
Guru BIOS

Question: When a loan has a balloon, say a 15 year amortization and a 5 year maturity, for HOEPA would you use the 5 or 15 year term in the rate spread calculation?

Answer: You ALWAYS use the length to maturity, not the amortized schedule. This would be 5 years in your scenario.

First published on BankersOnline.com 8/01/05

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