What type of loans does the Home Ownership and Equity Protection Act (HOEPA) specifically regulate?

The Home Ownership and Equity Protection Act (HOEPA) specifically targets high-cost mortgage loans. These are loans that possess certain features, such as high-interest rates and high fees, which can put borrowers at risk of becoming overburdened with debt. HOEPA was enacted to provide protections for consumers against abusive lending practices associated with these high-cost loans.

The regulation is significant because it requires lenders to disclose the terms of such loans clearly and ensures that certain protections are in place to prevent predatory practices. By defining criteria that classify a loan as high-cost, HOEPA aims to give borrowers awareness of potentially problematic loans before they enter into such agreements. Consequently, the primary focus remains on loans that exceed specific thresholds regarding interest rates and fees, ensuring that vulnerable consumers are aware of the risks they may be taking on.

In contrast, standard mortgage loans typically do not carry the features that categorize them as high-cost and therefore fall outside of HOEPA's purview. Affordable housing loans and first-time homebuyer loans also do not automatically imply high cost, as these types of loans often include assistance measures aimed at making them more accessible and affordable for consumers.