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).