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• Changes to Regulation Z Expand Loans Subject to HOEPA
• Determining Coverage Under HOEPA
  • Loan Example
  • Applying the APR Test
  • Applying the Points and Fees Test
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Determining Coverage Under HOEPA

The Home Ownership Equity Protection Act (HOEPA) identifies a class of high-cost home equity loans through rate and fee triggers.

The regulation that implements HOEPA, Regulation Z, has undergone several changes, including how creditors determine if a loan is covered under the act. Compliance with the expanded HOEPA rules is mandatory as of Oct. 1, 2002.

Coverage under HOEPA will be determined in two ways:

1. if the APR on a first-lien closed-end home equity loan exceeds the yield of a Treasury security with a comparable maturity by more than 8 percentage points (must exceed 10 percentage points if a subordinate lien), or
2. if the points and fees the consumer pays at or before closing exceed the greater of $480 or 8 percent of the total loan amount.

See how the changes to Regulation Z affect high-cost home equity loans:

• Loan example
• Applying the APR test
• Applying the points and fees test

Full text of changes to Regulation Z:

• Regulation Z - final rule 

e-Perspectives, Volume 2, Issue 2, 2002

Federal Reserve Bank of Dallas  Community Affairs Office  P.O. Box 655906, Dallas, Texas 75265-5906 214-922-5377
Gloria Vasquez Brown  Vice President		Nancy C. Vickrey Assistant Vice President and Community Affairs Officer
Jackie Hoyer  Houston Branch Senior Community Affairs Advisor		Diana Mendoza Community Affairs Specialist
Veronica Garza Community Affairs Specialist		Karen Riley Community Affairs Specialist
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Affairs Office.

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