We don't make HOEPA loans, but I need to know what fees should be included in the calculation to set up our software. After reading through 226.32 and some BOL stuff, I think I've got it, but because I don't normally deal with HEOPA, I'd like some confirmation (or someone to set me straight).

HOEPA fees include:

1) Any fees the bank retains a portion of or pays to an affiliate

2) Mortgage broker compensation

3) Credit life and disability insurance and private mortgage insurance

Is that right?

Also, I'm confused about amounts paid into escrow. My understanding is PMI--HOEPA fee, property taxes--not HOEPA fee, hazard insurance--not sure...is that right? and what about hazard insurance?

Thanks much!

Spin - There is a handy HOEPA spreadsheet on the BOL Tools page (sorry, don't know how to link to it for you) that David Dickinson created. It works very well. You might find it useful!

Thanks. Actually, I did look at that tool--I just want to confirm that I understood correctly.

Can anyone help me out?

Here's an excerpt from our Lending Manual:


Total Points and Fees Payable Test: [§226.32(b)(1) – page 6670.01]

HOEPA has expanded the definition of points and fees beyond that of typical finance charges. HOEPA “points and fees” include:

1. All items required to be disclosed under §226.4(a) and 226.4(b) (finance charges), except interest or the time-price differential;
2. All compensation paid to mortgage brokers;
3. All items listed in §226.4(c)(7) [real estate underwriting fees like title insurance, appraisals, credit reports, etc. – see 2e on page 310] (other than amounts held for future payment of taxes) unless
a. the charge is reasonable,
b. the creditor receives no direct or indirect compensation in connection with the charge, and
c. the charge is not paid to an affiliate of the creditor; and
4. Premiums or other charges for credit life, accident, health or loss-of-income insurance or debt-cancellation coverage (whether or not the debt-cancellation coverage is insurance under applicable law) that provides for cancellation of all or part of the consumer's liability in the event of the loss of life, health or income or in the case of accident, written in connection with the credit transaction.

In short, if the bank or an affiliate of the bank (control or ownership of 25% or more) retains all or a portion of a fee charged on an applicable loan, the fee would need to be included as a “point or fee payable” to determine if HOEPA applies.

The following are some examples of charges that would be included in determining “points and fees payable” for HOEPA purposes:
• Points, Loan fees, Origination fees, etc.;
• Appraisal fee (if completed internally or by an affiliate);
• Credit life/disability insurance premiums;
• Yield spread premiums, service release premiums;
• Title insurance (if completed by an affiliate);
• Document preparation fees;
• All mortgage broker compensation paid by the consumer.

You can find this manual in the BOL Store:
http://www.bankersonline.com/bankerstore/index.php?main_page=product_info&products_id=423

I guess I should understand this, but I need help. When calculating the fee test under HOEPA, is the full (PMI)or mortgage insurance premium included in the calculation? I don't see this specifically discussed in 1026.32.

We offer Credit diability and life insurance for our home equity lines of credit. Is this a Hoepa trigger?

HOEPA does not apply to HELOCs

Thank you!

So it does apply to home equity loans not lines, correct?

HELOCs are expressly exempt. Closed end home equity loans are not.

We are setting up new mortgage software and I believe we may have a fee flagged incorrectly as it is adding the "Owners Title Insurance" fee into the HOEPA fee calculation. The fee is collected at the closing and the bank forwards it to the title insurance company. The bank does not retain any of the fee and is not affiliated with the title insurance company. I don't think this fee should be included but would like another opinion.

Is there any circumstance where this fee should be included in this calculation?