Mortgage Loan Originators Federal Laws Practice Test 2025 – Complete Exam Prep

The Home Ownership and Equity Protection Act, often abbreviated as HOEPA, is the legislation that amended the Truth in Lending Act (TILA) to introduce specific disclosure requirements for high-cost mortgages. This law was implemented to address the increased prevalence of predatory lending practices, particularly aimed at consumers who were taking out high-cost loans.

HOEPA requires lenders to provide additional disclosures to borrowers when the cost of a loan is above certain thresholds, which is meant to ensure borrowers fully understand the terms of their loans and the costs associated with them. The disclosures include clear information about the loan amount, interest rate, and other financial terms, as well as potential penalties and risks. This transparency helps consumers make informed decisions and aims to protect them from unfair or deceptive practices in the lending industry.

Additionally, it is important to recognize that the other acts listed do not specifically focus on the high-cost mortgage disclosure requirements as HOEPA does. The Homeowners Protection Act primarily deals with private mortgage insurance cancellation, the Community Reinvestment Act aims at encouraging banks to meet the credit needs of all communities, and the Home Mortgage Disclosure Act requires lenders to provide data about mortgage lending patterns but does not address high-cost mortgage disclosures.