A lender must provide a list of homeownership counseling organizations to most mortgage loan applicants within three days of application. This requirement applies to most types of close-end and open-end credit transactions, including high-cost mortgages.
Prior to making a high-cost mortgages, a creditor must receive written certification that the consume has received homeownership counseling on the advisability of the mortgage from a HUD approved counselor or a state housing finance authority, if permitted by HUD. The homeownership counselor cannot be affiliated with or employed by the creditor and the creditor cannot steer the consumer to a particular counseling agency.
The required counseling must cover the following topics:
•Key terms of the mortgage transaction as set out in the relevant disclosure;
•The consumer’s budget, including the consumer’s income, assets, financial obligations, and expenses; and
•The affordability of the mortgage transaction for the consumer.
The consumer must have received either the TILA-RESPA Loan Estimate required or the disclosures required for HELOCs before the homeownership counseling session on the advisability of the mortgage. For transactions where neither the Loan Estimate nor the disclosures for HELOCs is provided, counseling must occur after the consumer received the disclosures required for high-cost mortgages.
The rule does not require in-person counseling. Counseling may be provided via telephone, so long as it is provided by a HUD-approved counselor. A self-study program not be used to satisfy the counseling requirement.
A HOEPA Addendum form (to be used with a promissory note) and a HOEPA Rider form to be used with the Deed of Trust are located at the end of this Chapter.