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CFPB Issues Rules on HOEPA, Escrow Accounts

Posted on 1/11/2013

The CFPB issued two mortgage-related final rules yesterday. The first rule, issued under the Dodd-Frank Act, expands Home Ownership and Equity Protection Act (HOEPA) coverage for mortgages with high interest rates, fees, or prepayment penalties. The rule expands HOEPA to cover home-purchase loans and home equity lines of credit, revises the law's rate and fee thresholds for coverage, and adds a new coverage test based on a transaction's prepayment penalties.

The rule defines a high-cost mortgage as having an annual percentage rate that is more than 6.5 percentage points higher than the average prime offer rate for first mortgages, and more than 8.5 percentage points higher than the average prime offer rate for second or junior mortgages. A CFPB also released a consumer guide on the final rule.

The second final rule, also under Dodd-Frank, generally extends the required duration for an escrow account on high-cost mortgages from one year to a minimum of five years. It exempts loans made by certain creditors that operate predominantly in rural or underserved areas, as long as certain other criteria are met. The final rule goes into effect on June 1.

To read the HOEPA final rule visit:

To read the consumer guide on HOEPA visit:

To read the Escrow final rule visit:

To read the consumers guide on Escrow accounts visit:

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