What type of loan does Section 32 refer to?

Section 32 refers to high-cost loans as defined under the Home Ownership and Equity Protection Act (HOEPA). This regulation was established to protect consumers from predatory lending practices associated with certain types of loans that have high interest rates or fees. Specifically, Section 32 loans are subject to additional disclosures and protections due to their high-cost nature, which often places borrowers at a greater risk of foreclosure.

High-cost loans typically fall under specific thresholds related to the annual percentage rate (APR) in relation to the average prime offer rate for a comparable transaction, and they may also include certain points and fees that exceed statutory limits. This regulatory framework was designed to inform borrowers of the associated risks and to discourage lending practices that could exploit vulnerable consumers.

Conventional loans, adjustable rate mortgages, and construction loans do not carry the specific consumer protections that apply to high-cost loans under Section 32, as these categories can encompass a broad range of lending scenarios that do not necessarily involve the same level of risk or regulatory scrutiny.