HOEPA Benchmarks

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Question:

We are still struggling with HOEPA. None of us wants to originate HOEPA loans but if we do, we have the disclosures ready to issue the borrower (3 days prior). Is anyone aware of how many or what percentage of a bank's portfolio can be identified as HOEPA loans before the bank is viewed unfavorably by the regulators and/or Community Groups? Has a benchmark been published or discussed somewhere? Any ideas?

Answer:

There is no benchmark established and these loans are not "bad loans" nor indicative of predatory lending. But with the upcoming HMDA reporting of HOEPA loans you could face increased scrutiny from consumer groups who will attempt to use (and possibly misuse) the data.

First published on BankersOnline.com 10/28/02