Answer:
HOEPA is codified as section 32 of Regulation Z [12 CFR 226.32]. Therefore, the penalties are the same as Regulation Z. Let's talk more about practical penalties. The HOEPA disclosure is considered to be a "material disclosure" meaning that it is as important as the final Truth in Lending disclosure, HUD1/1A Settlement Statement and the Right of Rescission. Since most HOEPA loans are also rescindable loans, this gets a little more complicated.
The rescission period doesn't start until all material disclosures have been given (there have been court cases to prove this), the note is signed and the Right of Rescission notice is given. So, if you fail to give the HOEPA disclosure, you can't start the rescission period. This means that a failure to give the HOEPA notice makes the loan rescindable for 3 years from the date of consummation.
First published on BankersOnline.com 6/30/03
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