Answer:
HOPA’s rules apply to residential mortgage transactions.
This is defined in HOPA as – 12 USC §4901(15) – a transaction consummated on or after the date that is 1 year after July 29, 1998 , in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against a single-family dwelling that is the principal residence of the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling.
The ACT also references a residential mortgage loan which has the following definition – 12 USC §4901(14) – The term “residential mortgage” means a mortgage, loan, or other evidence of a security interest created with respect to a single-family dwelling that is the principal residence of the mortgagor.
The ACT applies to both fixed and adjustable-rate mortgages, as well as junior lien mortgages. TCA could not find anything in the ACT that carves out an exception for open-end credit.
Based on this, TCA’s opinion is that the ACT does indeed apply to HELOCs. However, if you wish to get a second opinion, you may want to reach out to your legal counsel.
