12 CFR §1026.32 — Requirements for high-cost mortgages (HOEPA)
Regulation Z §1026.32 implements HOEPA: coverage tests for high-cost mortgages, definitions, pre-consummation special disclosures, and prohibited terms.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1026.32 — Requirements for high-cost mortgages (HOEPA) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1026.32(a)(1) — High-cost-mortgage coverage tests (APR / points-and-fees / prepay-penalty)
(1) The requirements of this section apply to a high-cost mortgage, which is any consumer credit transaction that is secured by the consumer 's principal dwelling , other than as provided in paragraph (a)(2) of this section, and in which:
12 CFR §1026.32(b)(1) — Points and fees: closed-end credit definition
(1) In connection with a closed-end credit transaction, points and fees means the following fees or charges that are known at or before consummation:
12 CFR §1026.32(c) — Special pre-consummation disclosures for high-cost mortgages
(c) Disclosures. In addition to other disclosures required by this part, in a mortgage subject to this section, the creditor shall disclose the following in conspicuous type size:
12 CFR §1026.32(d)(1) — Prohibited balloon-payment terms in high-cost mortgages
(i) Balloon payment. Except as provided by paragraphs (d)(1)(ii) and (iii) of this section, a payment schedule with a payment that is more than two times a regular periodic payment.
12 CFR §1026.32(d)(6) — Prohibited prepayment penalty in high-cost mortgages
(6) Prepayment penalties. A prepayment penalty, as defined in paragraph (b)(6) of this section.
12 CFR §1026.32(a)(1) — High-cost-mortgage coverage tests (APR / points-and-fees / prepay-penalty) — enumerated items (chapeau recall fix)
(i) The annual percentage rate applicable to the transaction, as determined in accordance with paragraph (a)(3) of this section, will exceed the average prime offer rate, as defined in § 1026.35(a)(2), for a comparable transaction by more than: (A) 6.5 percentage points for a first-lien transaction, other than as described in paragraph (a)(1)(i)(B) of this section; (B) 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000; or (C) 8.5 percentage points for a subordinate-lien transaction; or (ii) The transaction's total points and fees, as defined in paragraphs (b)(1) and
12 CFR §1026.32(b)(1) — Points and fees: closed-end credit definition — enumerated items (chapeau recall fix)
(i) All items included in the finance charge under § 1026.4(a) and (b) , except that the following items are excluded: (A) Interest or the time-price differential; (B) Any premium or other charge imposed in connection with any Federal or State agency program for any guaranty or insurance that protects the creditor against the consumer 's default or other credit loss; (C) For any guaranty or insurance that protects the creditor against the consumer 's default or other credit loss and that is not in connection with any Federal or State agency program:
12 CFR §1026.32(c) — Special pre-consummation disclosures for high-cost mortgages — enumerated items (chapeau recall fix)
(1) Notices. The following statement: “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.” (2) Annual percentage rate. The annual percentage rate. (3) Regular payment; minimum periodic payment example; balloon payment.
12 CFR §1026.32(b)(1) — Points and fees: closed-end credit definition — enumerated items (chapeau recall fix) — enumerated items (chapeau recall fix)
(1) If the premium or other charge is payable after consummation, the entire amount of such premium or other charge; or (2) If the premium or other charge is payable at or before consummation, the portion of any such premium or other charge that is not in excess of the amount payable under policies in effect at the time of origination under section 203(c)(2)(A) of the National Housing Act ( 12 U.S.C. 1709(c)(2)(A) ), provided that the premium or charge is required to be refundable on a pro rata basis and the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan; (D) Any bona fide third-party charge not retained by the creditor, loan originator, or an affiliate of either, unless the charge is required to be included in points and fees under paragraph (b)(1)(i)(C), (iii), or (iv) of this section; (E) Up to two bona fide discount points paid by the consumer in connection with the transaction, if the interest rate without any discount does not exceed: (1) The average prime offer rate, as defined in § 1026.35(a)(2), by more than one percentage point; or (2) For purposes of paragraph (a)(1)(ii) of this section, for transactions that are secured by personal property, the average rate for a loan insured under Title I of the National Housing Act ( 12 U.S.C. 1702 et seq. ) by more than one percentage point; and (F) If no discount points have been excluded under paragraph (b)(1)(i)(E) of this section, then up to one bona fide discount point paid by the consumer in connection with the transaction, if the interest rate without any discount does not exceed: (1) The average prime offer rate, as defined in § 1026.35(a)(2), by more than two percentage points; or (2) For purposes of paragraph (a)(1)(ii) of this section, for transactions that are secured by personal property, the average rate for a loan insured under Title I of the National Housing Act ( 12 U.S.C. 1702 et seq. ) by more than two percentage points;