True or False: HOEPA prohibits lenders from charging an APR that is 10 points higher than a rate on a Treasury Bill.

HOEPA, or the Home Ownership and Equity Protection Act, is designed to protect consumers from predatory lending practices, particularly in relation to high-cost mortgages. One of the key regulations under HOEPA is that it sets standards for what constitutes a high-cost mortgage.

The regulation does impose limits on lenders regarding charges in relation to interest rates, specifically when comparing the loan's annual percentage rate (APR) to rates on Treasury Bills. However, HOEPA does not prohibit lenders from charging an APR that is exactly 10 percentage points higher than a Treasury Bill. Instead, the focus is on whether the loan meets certain thresholds that classify it as high-cost, triggering additional disclosures and protections for the borrower.

If the APR exceeds the specified thresholds in relation to the Treasury rate, the loan would be considered a high-cost mortgage, and the lender must then comply with additional regulations. Thus, saying that HOEPA outright prohibits charging a rate 10 points above a Treasury Bill does not accurately reflect the law’s content. Instead, it is more about the classification and resulting protections rather than a strict prohibition based on that specific margin above a Treasury yield.

Therefore, the statement is false, as it oversimplifies the conditions set by HOEPA and does not accurately capture its