The Home Ownership and Equity Protection Act (HOEPA) was created to protect homeowners from abusive lending practices and predatory lenders. It targets high cost mortgages and other risky loans by requiring strict disclosure rules and a waiting period before closing. If you’re borrowing under a loan covered by HOEPA, your lender must give you specific information well in advance, at least three business days before finalizing your loan.
This disclosure window is not just a formality, it’s a legal right that gives borrowers time to review the details of their loan and walk away if needed. If you’re unsure whether your loan falls under HOEPA coverage, it helps to talk to a HUD-approved housing counselor who can evaluate the terms for you.
HOEPA rules are outlined under Section 32 of Regulation Z, part of the Truth in Lending Act (TILA). These rules apply to closed end credit transactions secured by the borrower’s principal dwelling, and especially loans deemed high costunder federal guidelines. That includes loans that:
Not all mortgages are affected; some alternative mortgages, reverse mortgages, and home purchase loans are excluded. However, if the loan does fall under HOEPA, the lender must follow very specific steps.
The Equity Protection Act under HOEPA was passed to prevent homeowners from being stripped of their equity by deceptive lending practices. Before this law, unscrupulous lenders could trap people with high-cost loans, charge excessive late fees, or even encourage borrowers to refinance over and over again, each time draining more equity through fees paid and higher interest rates.
Now, HOEPA makes sure you’re informed. If a loan meets the thresholds for HOEPA coverage, your lender must provide disclosures in writing. These disclosures must be clear, easy to understand, and delivered three full business days before the loan is finalized.
The Dodd-Frank Act significantly strengthened HOEPA regulations. It expanded the definition of high cost mortgages, tightened restrictions on points and fees thresholds, and improved enforcement. The goal was to close loopholes and reduce the number of consumers harmed by high cost loans that had previously slipped through the cracks.
Because of Dodd-Frank, HOEPA now covers more types of loans and requires better homeownership counseling for borrowers. In fact, if your loan is considered high cost under HOEPA, your lender must make sure you receive pre loan counseling from a qualified third party, such as a HUD-approved counselor.
If your loan is subject to HOEPA, the lender must give you written disclosures that include:
These rules help ensure you’re not caught off guard by surprise charges or sudden rate hikes.
After receiving these disclosures—sometimes called Section 32 disclosures—you are entitled to a three-day waiting period. During these three business days, your lender cannot move forward with the loan, and you are not required to sign anything. This gives you time to review the full terms of the loan and decide whether to continue.
If the lender fails to follow this process, they are violating HOEPA law, and you may have the right to cancel the loan for up to three years after signing. Borrowers who believe their rights under HOEPA were violated should seek help immediately, ideally from a nonprofit housing counseling agency like Credit.org.
Under HOEPA, not every expensive loan is automatically deemed high cost. To determine coverage, a loan must meet specific thresholds related to fees paid, interest rates, and loan terms. A mortgage may be considered “high cost” if it meets any of the following conditions:
These rules were developed to protect borrowers from loans that look affordable up front but become unaffordable over time. For example, a loan may have a low introductory rate but come with a high cost structure that includes rising payments and high percentage points over the life of the loan.
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The fees threshold under HOEPA is one of the key indicators of a high cost mortgage. If the total points and fees exceed a certain percentage of the loan’s amount, the loan is flagged. As of 2025, the threshold is generally:
Points and fees include broker fees, loan origination charges, credit insurance premiums, and other prepaid finance charges. If the costs of originating your loan are unusually high, you may be looking at a HOEPA-covered transaction.
Because HOEPA loans are secured by your property, falling behind on payments puts your home ownership at risk. The law requires lenders to state this clearly in the written disclosure: if you default, the lender may foreclose, potentially taking the home along with the equity you’ve built up.
This is why HOEPA focuses so heavily on full and early disclosure, to protect home equity lines and homeownership from unnecessary risk. Losing a home doesn’t just mean losing shelter; it often means losing years of investment and security.
To help avoid foreclosure and protect your home, borrowers are encouraged to get help from certified nonprofit organizations. A free session with a HUD-approved counselor through Credit.org can provide insight into your loan’s terms and help you understand your rights.
The Consumer Protection Act, which expanded federal oversight of financial services, plays a supporting role in HOEPA’s enforcement. It ensures that lenders follow fair lending standards, avoid abusive mortgage lending practices, and disclose all key terms in advance.
The Act also strengthens borrower protections by requiring lenders to assess the borrower’s ability to repay the loan. That means evaluating income, debt, and overall financial situation—not just whether the borrower qualifies based on a credit score.
These reforms make it harder for unscrupulous lenders to push borrowers into loans they can’t afford, which was a widespread issue before the financial crisis of 2008.
The Federal Reserve originally implemented HOEPA rules under Regulation Z. Today, many responsibilities have shifted to the Consumer Financial Protection Bureau (CFPB), but the Fed still plays a role in monitoring the mortgage market and ensuring fair lending practices.
The Federal Reserve and the CFPB work together to review market trends, adjust threshold values, and ensure compliance with HOEPA’s protections. For example, the high cost mortgage thresholds are updated annually based on inflation and average loan sizes. This ensures the law keeps pace with changing economic conditions.
Consumers can find current threshold values and annual updates directly from the Federal Reserve, which posts public notices regarding Regulation Z changes.
It’s important to understand that not all loans are subject to HOEPA disclosure rules. The following types of loans are typically exempt:
Also, certain home purchase loans that meet Qualified Mortgage (QM) standards may be excluded if they don’t exceed APR or points and fees thresholds.
The purpose of these exemptions is to avoid overburdening safe loan products with unnecessary disclosures, while focusing protections on loans that present a higher risk of equity stripping or long-term financial harm.
Learn more about HOEPA Covered Loans
When a loan is categorized as high cost under HOEPA, lenders are required to ensure the borrower receives pre-loan counseling. This counseling must be provided by an independent third-party, typically a HUD-approved housing counseling agency. The session is meant to help you:
The goal is to equip borrowers with the knowledge needed to make smart, informed decisions—especially when a loan could put their home ownership at risk.
Organizations like Credit.org offer these services free of charge, and counselors can review the loan’s disclosures with you before you sign anything. In fact, you’re encouraged to bring your full loan documents and ask questions to ensure everything is clear and fair.
See our HOEPA Lender Compliance Guide
If a HOEPA loan seems risky or expensive, consider looking into alternative mortgages. These may include:
These alternatives typically offer more favorable terms, require lower fees, and are designed to support long-term, sustainable homeownership, especially for first-time buyers or low-income families.
Comparing these options with a HOEPA loan helps you evaluate the long-term cost of your mortgage and avoid surprises like balloon payments or steep rate increases.
If a lender fails to meet HOEPA’s strict disclosure requirements, borrowers have legal protections. You may:
HOEPA allows borrowers to take legal action and protects against deceptive behavior. However, acting fast is essential, especially if you’re within the three-year cancellation window.
The CFPB’s complaint portal is a good starting point to report violations and get help resolving disputes.
Thanks to the Dodd-Frank Act, HOEPA’s reach has expanded to cover more types of risky loans. It added critical protections for borrowers, including:
This legislation also led to the creation of the CFPB, which enforces HOEPA rules and ensures transparency across the mortgage industry. Together, HOEPA and Dodd-Frank provide one of the strongest legal frameworks protecting homeownership in the U.S.
If you’re unsure whether your mortgage falls under HOEPA—or if your lender provided confusing or incomplete disclosures—it’s best to seek expert advice. Warning signs that you might need assistance include:
Nonprofit counselors at Credit.org can provide guidance and connect you with state or federal resources to protect your rights and your home.
The Home Ownership and Equity Protection Act is designed to stop lenders from taking advantage of borrowers through deceptive practices and high-cost loan terms. Whether you’re a first-time buyer or refinancing, understanding the HOEPA disclosure requirements is essential.
Key takeaways:
Use these protections to your advantage. Review your loan documents, ask questions, and work with trustworthy counseling agencies to avoid costly mistakes. Your home ownership and your financial future are worth protecting.
If you have any questions about HOEPA disclosures, call us to talk to a HUD-approved housing counselor. We can look over your loan’s disclosures with you and give you expert advice and answers to any of your questions.
