HPA – What is the scope of the Homeowner’s Protection Act?

Compliance > Homeowners Protection Act
Q:  What is the scope of the Homeowner’s Protection Act? 
A:   The Act applies primarily to “residential mortgage transac­tions,” defined as mortgage loan transactions consummated on or after July 29, 1999, to finance the acquisition, initial con­struction, or refinancing of a single-family dwelling that serves as a borrower’s principal residence.  The Act also in­cludes provisions for annual written disclosures for “residen­tial mortgages,” defined as mortgages, loans or other evidenc­es of a security interest created for a single-family dwelling that is the principal residence of the borrower (12 USC §4901(14) and (15)). A condominium, townhouse, coopera­tive, or mobile home is considered to be a single-family dwell­ing covered by the Act.
The Act’s requirements vary depending on whether a mort­gage is:
  • A “residential mortgage” or a “residential mortgage trans­action”;
  • Defined as high risk (either by the lender in the case of non-conforming loans, or Fannie Mae and Freddie Mac in the case of conforming loans);
  • Financed under a fixed or an adjustable rate; or
  • Covered by borrower-paid private mortgage insurance (BPMI) or lender-paid private mortgage insurance (LPMI).
This Q&A was based on information contained in the FDIC’s Compliance Examination Manual for Homeowner’s Protection Act – September 2015, which may be found here:  https://www.fdic.gov/regulations/compliance/manual/5/v-5.1.pdf

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