Annual HOEPA Adjustment

Each year, the Board of Governors of the Federal Reserve System publishes the dollar amount used for measuring whether a loan is a high cost mortgage for purposes of Regulation Z's Section 226.32. The regulation uses both a dollar amount an a percentage of the total loan amount. Originally $400, the dollar amount has increased slightly each year. For the coming year, 2002, the adjusted dollar amount is $480.00. The percentage measurement remains at 8% of the total loan amount.

The triggers for the special high cost mortgage disclosures required by HOEPA is getting increased attention because of predatory lending concerns. In addition to this routine adjustment, the FRB is considering adjusting the triggers for the high cost loan so that more loans are included in the special category. Financial institutions are likely to see the greatest impact of any change on balloon mortgages.

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 14, 12/01