What does HOEPA stand for?

The correct answer is that HOEPA stands for the Home Ownership and Equity Protection Act. This federal law was enacted to protect consumers in loans that have high costs or predatory terms. HOEPA restricts certain practices of lenders and sets specific requirements for loans secured by a consumer's home.

This act emerged in response to concerns over abusive lending practices, particularly in the subprime mortgage market. By establishing guidelines and informing borrowers about their loan terms, HOEPA aims to promote transparency and protect consumers from potentially harmful loan conditions.

Understanding this law is crucial for mortgage loan originators, as it impacts how they can structure loans and informs them about the disclosures that need to be provided to borrowers under certain circumstances.