BuyDown and HOEPA

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    Does anyone know what HOEPA is? Is there 2 different grants from BOA? Can they be combined? Is one better than the other? I have been struggling with understanding this for several months. I am having a difficult time understanding what my MC is explaining to me. I wanted to buydown my interest rate to .125 so I set the amount I knew I needed to the side but she told me that I could only do .625. She said the other remaining funds would be applied to principal reduction so that I wouldn’t trigger HOEPA. I am a priority member. My rate locked in at 2.375. I am totally lost as to what that is and why I cant buydown to .125.??. Below is an email I sent to my MC to clarify a phone conversation we had. It just dont make sense to me but maybe I am missing something.

    The maximum points I can reduce is 5 points which will be (3 points from me and 2 points will come from BOA)
    The end results is 1.125 interest rate
    Buydown cost will be $16,000 total ($9600 from me and $6400 from BOA)
    Monthly payment will be around $1400

    If I choose to do the buydown all the way to .125 it will trigger HOEPA
    I can not buy down to .125 with BOA
    BOA will NOT give me the 2 points
    Buydown cost will be around $17000
    I would need to do a principal reduction of roughly $12000
    NACA will help me with most of the principal reduction out of the $12,000
    Monthly payment will be around $1600

    I was so confused that I decided to ask again below is what I asked
    Just to confirm
    If I buy down to .125 my monthly payment will be approximately $1600 and I would not get the BOA grant
    If I buy down to 1.125 my monthly payment will be approximately $1400 and BOA grant will be given

    and this was the response I received.
    “yes for the LMIB yes 1.125.”

    What does LMIB mean?

    Thanks in advance.


    Hoepa is a law from 1994 protecting buyers and preventing shady practices. It’s also known as the truth in lending act. It’s why your contract has addenda about lead asbestos etc.

    Boa has many grants most if any don’t work with naca.

    Prior to August 2019 bank of America had 2 naca only grants and they were offered to priority members. They could not be combined. At that time if your income was below 80% of the median income you would get an automatic interest rate reduction. And if you were buying down interest rates then bank of America would automatically match your buy down which doubled it. But you could not accept the automatic reduction and lender match it had to be one or the other.

    Today, due in large part to Citibank, who abruptly dumped all their clients on boa there is only the interest rate reduction for low income members. There may be other grants but they are not specific to naca.

    0.125% interest is only available for a 15 year wealth builder mortgage. For the same reason as above the contract and program specifics with boa changed in August 2019. Boa actually canceled everything and naca came up with a compromise in September.

    Today all members are limited to 5 points of buy down combined from their own money grants and gifts. Sellers however are allowed to contribute up to 10 additional points. It is very common for sellers to contribute. Usually in the area of 2 to 3%. If you see a listing where the seller is advertising closing help that money automatically goes to buy down. If the listing doesn’t advertise closing help then still ask for it because they usually agree to it.

    I don’t know what lmib is but boa never granted 2 points so I don’t know where you got that from.

    If you spend more than 5 points then the additional money goes to principle reduction without exception.

    If you buy up to 5 points boa will reduce your interest rate automatically by 0.5% simply due to your income level.

    If you want 0.125% interest the only way allowed for any member under any circumstances is to have seller contributions. Unless we go into another recession and the fed rate drops into the 1s.

    This is all assuming you are applying for a 30 year mortgage. If you apply for the 15 year wealth builder mortgage you can buy down to 0.125% interest on your own.


    @Nelsont Thank you. I think I am slowly getting it. I am doing the 30 year loan. Does NACA help with anything financially? I think thats the part that had me confused because MC mentioned something about if HOEPA was activated I would not be able to receive BOA grant but NACA would assist with most of the Buydown. I dont understand how HOEPA affect the process? MC told me if I buydown to .125 then HOEPA would be activated. I dont understand what that means.

    So with the 5 points max allowed that means that I would only be able to buy down to 1.125 where BOA will give me .5% (2 points) and I will only be able to do .75% (3 points) reduction totaling 5 points (5% of the purchase price)?
    Locked rate 2.375%
    With BOA reduction of .5% = 1.875%
    Member Buy down 3 points = .75%
    Final Interest rate is = 1.125% (2.375% – .5% – .75%)


    Does that mean my interest rate would be .625% after I buydown to 1.25% (5 points) max and BOA will also automatically reduce my interest rate by .5% (2 points) totaling 7 points (7% of the purchase price)
    Locked rate 2.375%
    With BOA reduction of .5% = 1.875%
    Member Buy down 5 points = 1.25%
    Final Interest rate is = .625% (2.375% – .5% – 1.25%) This is what is on my loan estimate but I want to make sure these things are correct and I indeed could not buy down to .125% which I now understand from your response.

    My question is what is the limit really 5 points or is it 7 points when including BOA reduction?


    Naca is a consumer advocacy group. They are not a charity, a government organization nor a lender.

    They were founded on the principle that banks should not be taking advantage of buyers. There #1 mission is to spread the word about predatory lending.

    Naca also happens to certified with HUD as a mortgage counseling agency. The form of help naca provides is counseling members to become eligible for a home loan. They do not provide direct financial assistance.

    Indirectly naca members receive the benefit of lower interest rates from bank of America. Members do not receive money from naca.

    I really don’t know what your MC meant by assisting with the buy down. Naca has never provided financial assistance. Maybe they meant they would do the math???

    For the interest rate. You automatically get the rate reduction. So you locked in your rate at 2.375. But in actuality it’s 1.875. If you buy down 5 points you get 0.625. If you want 0.125 you need 2% seller contributions.

    The buy down limit is 5%. The gift from bank of America does not fall into buyers or sellers categories
    They just slash the rate for low income buyers.

    Think of it like the opposite of what a bank does. You see that advertisement for a super low 2.5%. But reading the fine print that’s only for select buyers with impeccable credit and income. In reality if you are approved for that loan the bank would tack on a % or 2. In nacas case they do the opposite.


    @Nelson Thank you so much!! I now completely understand it.

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