How does a hard money loan fit into the HOEPA regulations?
I did a hard money loan that charged 12.99% interest 18.99%APR, 5 points, and had a balloon payment at the end of 6 months. After not paying on this loan and being way past due he has a lawyer suing for a bunch of reasons but it seems the primary is this loan fell under HOEPA which would make it illegal for the high interest, points and balloon payment. I did not think this loan was HOEPA, the loan officer who arranged it never even heard of HOEPA …does anyone know? Thank you in advance for your input!
Was the property owner occupied?
HOEPA only comes into play when you are dealing with O/O
HOEPA is the Home Owner’s Equity Protection Act. It is designed to protect owner/occupants from being hit with incredibly high interest rates by predatory lenders. It does not apply to nonowner occupied/investment properties.
Which is also why you always see a note on the bottom of most HML forms that its not for owner occ properties.