Which law defines a high-cost loan, sometimes referred to as a Section 32 loan?

The Home Ownership and Equity Protection Act (HOEPA) is the law that defines a high-cost loan, often referred to as a Section 32 loan. HOEPA was enacted as an amendment to the Truth in Lending Act to address certain abusive practices in home equity and high-cost mortgage lending.

Under HOEPA, loans that exceed specified thresholds concerning points and fees, interest rates, or prepayment penalties are classified as high-cost loans. This classification brings additional consumer protections, such as increased disclosure requirements and restrictions on lender practices to help borrowers better understand the costs and risks associated with these loans.

In contrast, the other laws mentioned, while they pertain to mortgage lending and consumer protection in federal laws, do not specifically define high-cost loans. The Homeowners Protection Act primarily deals with private mortgage insurance (PMI), the Mortgage Reform and Anti-Predatory Lending Act aims to curb predatory lending practices without directly defining high-cost loans, and the Home Mortgage Disclosure Act focuses on the reporting of mortgage data to show lending patterns and enforce fair lending practices.