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#329060 - 03/03/05 06:55 PM HOEPA
Anonymous
Unregistered

We do not make loans that are covered by HOEPA. Do we need to have a policy? Do we need to address when we check our loans for HOEPA? Since our lenders don't have leway to deviate from the rate sheet and we use the same providers all the time, when would we need to check for HOEPA? Does someone have a link they might share on this issue?

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Lending Compliance
#329061 - 03/03/05 06:59 PM Re: HOEPA
Anonymous
Unregistered

I have a question on fees. It says premiums for credit life, disability insurance, debt cancellation, etc. We don't charge the fees up front. Life and disability insurance is paid monthly with the mortgage premium. How does that factor into HOEPA?

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#329062 - 03/03/05 07:09 PM Re: HOEPA
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
First Anon - you need to periodically check loans and keep your work sheets to show you are checking for and aware of the HOEPA requirements.

Second Anon - for monthly premium products you would only count any premiums collected at or before closing. Some FI will collect 1 or 2 monthly premiums as reserves. These would be included in your calculation.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#329063 - 03/03/05 07:41 PM Re: HOEPA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree with Dan and just want to add that you don't need a policy - by regulation - that you don't do HOEPA loans. If your board feels strongly this way, maybe they want a policy, but one is not required.

I have one question for the first Anon: Why not offer loans that exceed the HOEPA limits? There is nothing illegal about these, they just trigger a disclosure. Is there something unethical in your mind about HOEPA loans?
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David Dickinson
http://www.bankerscompliance.com

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#329064 - 03/04/05 02:00 PM Re: HOEPA
Anonymous
Unregistered

From first anon. We don't set out NOT to offer HOEPA loans, it's just that our fee structure and rates don't crank out HOEPA loans.

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#329065 - 03/04/05 07:35 PM Re: HOEPA
kiddo Offline
New Poster
Joined: May 2004
Posts: 10
Although it may not be unethical to make HOEPA loans, many investors in the secondary market will not purchase these loans. Our mortgage department will not make HOEPA loans for that reason.

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#329066 - 03/06/05 02:26 PM Re: HOEPA
Anonymous
Unregistered

That's very interesting on the secondary market. I have what may appear to be a stupid question: When calculating a loan for HOEPA, does it make a difference if you use an amount of $10,000 instead of $100,000? This is when you test a loan using the rate sheet numbers.

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#329067 - 03/07/05 04:39 PM Re: HOEPA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Anon: If you are talking about the APR Spread Test, no, it doesn't make a difference. If you are talking about the Fees Test, yes, it makes a huge difference.
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David Dickinson
http://www.bankerscompliance.com

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#329068 - 03/07/05 07:10 PM Re: HOEPA
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
Quote:

Anon: If you are talking about the APR Spread Test, no, it doesn't make a difference. If you are talking about the Fees Test, yes, it makes a huge difference.




I agree in theory, but the question is not specific enough.

The loan amount could make a difference in the APR test, the spread is the same (5 & 8), but a $10,000 loan and a $100,000 with the same interest rate, same closing fees and same term will have different APRs, and the APR at consummation is the APR you use to test for the spread.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#329069 - 03/07/05 08:09 PM Re: HOEPA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
You're right. I'm assuming that they were using a calculator (like our HOEPA Worksheet) that only asks for the APR and the loan amount. The loan amount (either $10,000 or $100,000) is irrelevant as the Spread test only looks at the APR and compares it to the like term Treasury security. By the way the question was asked, I assumed (I know, I know) that this person wasn't looking at fees, interest, etc. to test for the spread.
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David Dickinson
http://www.bankerscompliance.com

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#329070 - 03/07/05 08:21 PM Re: HOEPA
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
David, one of the reasons I didn't respond earlier was I was uncertain about what this is when you test a loan using the rate sheet numbers meant.

I periodically run tests on different loan amounts against our rate sheet, terms etc. & based on our fees. By doing this I have a good idea what loan amounts and terms I have to be concerned about.

If the above poster meant does it make a difference in running such a test, then the loan amount definitely makes a difference. If I ran all my tests on $100,000 then I'm going to miss several possibilities that could fall within HOEPA thresholds. If they were asking if the spread threshold for a $10,000 and $100,000 loan is the same then the answer would be yes and either loan that exceeded the threshold would be subject to HOEPA disclosures.

I just wasn't sure what was being asked.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#329071 - 03/07/05 10:02 PM Re: HOEPA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

I just wasn't sure what was being asked.



I shouldn't have assumed anything so it was good that you covered this from a different angle.
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David Dickinson
http://www.bankerscompliance.com

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#329072 - 03/08/05 02:05 PM Re: HOEPA
Anonymous
Unregistered

Original poster: Thank you for responding. I have a loan department that says "we never have HOEPA loans". The fees are pretty basic, and we don't upcharge anything. Legal, title insurance, etc. at actual fees. We charge a percentage for points so that changes with the amount of the loan. I know the loan department isn't even running the numbers on actual loans. They just say they don't have HOEPA loans. I'm thinking they use $100,000 as the loan amount when they run a HOEPA test against the rate sheet. They use what the points would be and the average fees that we pay attorneys, etc. My question was, could calculating those fees against a $10,000 loan make it different from calculating it against a $100,000 loan. The points are $200 on $10,000 and $2,000 on $100,000, but the other fees are the same. We do not collect insurance premiums at closing. They are paid monthly with the loan payment. I hope I'm making myself a little clearer in this paragraph. This is all so confusing and I'm not getting much in the way of cooperation from the lenders. That's why I'm asking. They're not the most cooperative bunch and I want to know a little more about what I'm saying before I go to them. Thank you.

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#329073 - 03/12/05 05:45 PM Re: HOEPA
Anonymous
Unregistered

I think the dollar amount matters in calculating the fees. We use $10,000 as our loan amount.

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#329074 - 03/18/05 10:20 AM Re: HOEPA
Anonymous
Unregistered

Question: HOEPA is based on the date the application is received. On wholesale loans, what are you using? The date the initial application was signed by the borrower or the date you received the application from the broker?

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#329075 - 03/18/05 06:32 PM Re: HOEPA
Anonymous
Unregistered

Any assistance is greatly appreciated.

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#329076 - 03/18/05 06:36 PM Re: HOEPA
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
226.32: Requirements for Certain Closed-End Home Mortgages (01/01/02)

(a) Coverage.

(1) Except as provided in paragraph (a)(2) of this section, the requirements of this section apply to a consumer credit transaction that is secured by the consumer's principal dwelling, and in which either:

(i) The annual percentage rate at consummation will exceed by more than 8 percentage points for first-lien loans, or by more than 10 percentage points for subordinate-lien loans, the yield on Treasury securities having comparable periods of maturity to the loan maturity as of the fifteenth day of the month immediately preceding the month in which the application for the extension of credit is received by the creditor;


I would go by the date you, the creditor, received the application.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#329077 - 03/22/05 03:10 PM Re: HOEPA
Dorothy W Offline
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Dorothy W
Joined: Aug 2004
Posts: 164
Upstate SC
I agree with Dan that the key point is Creditor. Did the broker close the loan in their name and your banks, as the wholesale investor, bought it as a secondary market transaction? If yes, then the lender/creditor is really the broker whom you bought the loan from, and the date they received the application would be the HOEPA rate date to use.

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#329078 - 03/22/05 09:31 PM Re: HOEPA
Anonymous
Unregistered

The loan closed in our name. The broker took the application and processed the loan. We underwrote and closed the loan.

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