For federally connected mortgage loans and loans to first-time borrowers that permit negative amortization, regardless of whether they are high-cost loans, the HOEPA regulation establishes homeownership counseling obligations that must be followed. Mortgage Loans Associated with the Federal Government
As required by Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 U.S. Code 1701x (c)(5)), creditors servicing a house loan are required to notify qualified homeowners about the availability of homeownership counseling.
If an application for a reverse mortgage transaction is subject to 12 CFR 1026.33 (a), the lender is not obligated to furnish the applicant with the list of homeownership counseling groups required by this section. (2) Timeshare arrangements.
Generally, the homeownership counseling notification requirements apply to all creditors who service loans backed by a mortgage or lien on a single-family house (home loans). Home loans include traditional mortgage loans as well as loans that are guaranteed by the Department of Housing and Urban Development (DHUD) (HUD).
The Consumer Financial Protection Bureau (CFPB) has published a final rule to help lenders in complying with the RESPA and TILA homeownership counseling obligations. According to the Real Estate Settlement Procedures Act, a lender is required to give applicants for a federally connected mortgage loan with a list of licensed homeownership counselors.