What is the primary purpose of the Home Ownership Equity Protection Act (HOEPA)?

The primary purpose of the Home Ownership Equity Protection Act (HOEPA) is to define high-cost loan parameters and protect consumers. This legislation focuses specifically on certain types of loans, which are considered high-cost based on their interest rates and fees. By establishing clear criteria for what constitutes a high-cost loan, HOEPA aims to inform borrowers and provide them with protections against potentially predatory lending practices.

This includes requiring lenders to provide consumers with disclosures about the terms of high-cost loans, which helps borrowers make better-informed decisions. Additionally, HOEPA prohibits certain practices associated with high-cost loans, such as balloon payments and excessive fees, thereby promoting a more transparent and accountable lending environment for consumers.

While the other options touch on important aspects of mortgage lending, they do not directly align with the primary focus of HOEPA. For instance, private mortgage insurance regulation and options for lower-income borrowers fall under different laws and regulations. Similarly, while fair lending practices are crucial, they are governed by other pieces of legislation, such as the Equal Credit Opportunity Act. Therefore, understanding HOEPA's specific role in consumer protection and its focus on high-cost loans is essential for grasping its purpose within the mortgage lending landscape.