HOEPA

Great site!

I was wondering about HOEPA violations on a mortgage. Is there a statute of limitations on a federal HOEPA loan? I live in California–there doesn’t seem to be any time limits on the comparable California version.

If the right to rescind a violation is unlimited under TILA when you’ve been in foreclosure, is it also the same for HOEPA?

I was reading the law and it says that there are ‘enhanced damages’ described as fees and points. Are the payments made on the loan part of the fees and points? Does this mean that whatever they are–you get double back if there’s a violation?

Amalia

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Hello Amalia,

HOEPA damage claims for an affirmative lawsuit have a one year statute of limitations; however, there is no statute of limitation if raised defensively – such as is the case when fighting a foreclosure action. 

The extended right to rescind under 1635(f) of the TILA is strictly limited to three-years.  This was actually decided in a Supreme Court case in Beach v. Ocwen Fed. Bank, 523 U.S. 410, 118 S. Ct. 1408, 140 L. Ed. 2d 566 (1998) where the Court concluded:

“We respect Congress’s manifest intent by concluding that the Act permits no federal right to rescind, defensively or otherwise, after the 3-year period of §1635(f) has run.  Accordingly, we affirm the judgment of the Supreme Court of Florida.”

All fees and charges paid on the loan are considered ‘enhanced damages’ under HOEPA, so the portion of your payment that went to anything other than principal would be included as well as all of the closing costs paid at or before the loan closing.  The statute appears to me to permit a consumer award for HOEPA damage claims as well as rescission which would effectively be a double award because through rescission the finance charge is cancelled.    

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.