Our loan software systems are not readly for HOEPA. I have been hitting a brick wall with this. I can't convience senior management that a manual calculation will need to be done to determine if a loan falls under HOEPA. They are going to say what is the penalty if we miss a HOEPA loan if we wait for the software company to handle the calculation and disclosure.

Sounds like your problem is bigger than HOEPA. How did your upper management become upper management with attitudes like this? Willful violations are bad news. For TILA the criminal penalties are fines up to $5000 and/or imprisonment up to one year. Civil penalties are two times the total finance charge up to $1000 but not less than $100...for each offense.

In addition to TILA's penalties, you would never be able to sell the loan on the secondary market.

It does not take that long for a manual computation. Why would they want to chance this with the regulators?

If they insist on doing this, I would make sure the decision to do this is in writing so that they could not pin this on you at a later date.

This is a little off the subject, but I can't believe that a normal bank would be making very many loans that would trigger the HOEPA disclosures anyway. Am I missing something? I mean, you really have to be socking it to the customer in order to trigger the disclosures.

I have feeling that we won't have that many. But I figured the examiners are not going to buy us saying we don't think we have any without checking and document that each applicable loan was check against the rate and fee tests.

If you sell any type of credit insurance on consumer real estate you could very well end up with a HOEPA loan. We tested 4 loans with credit insurance. 2 out of the 4 triggered section 32 requirements.

Like I said, unless you're socking it to the customer, would you even trigger HOEPA. Can anyone say $240 Million dollars! Maybe we should rethink this credit life thing.

We have very few that apply, but I'm sure that Oct. 1st we will have one if we are not ready.

I agree with rethinking the credit life issue, but unforturnatley mgmt doesn't have my same view.

I, too, thought we were a normal bank with fantastic pricing, and we are, but when you throw credit insurance premiums into the fees and points test, it becomes a factor on larger 2nd REMs. I was shocked when my tests ran 50/50 for HOEPA coverage. I will be having our lenders work the wonderful HOEPA spreadsheet provided via this website on any real-estate loan with credit insurance sold. They just don't know it yet.

If you are still going to offer single premium credit life insurance, I would suggest you do a search on the web and print a few articles concerning yesterday's $240 million Citibank settlement and the continued outcry concerning it being a predatory lending practice (if it is automatically assesses or voluntary - they seem to have forgotten a few points of the suit) and show all these articles to your management and ask them to weigh their decision to continue to offer it under the "reputational risk" category and see what they say.