source:
  type: regulation
  id: reg-z-1026.34
  authority: 12 CFR §1026.34 — Prohibited acts or practices in connection with high-cost mortgages
  description: 'Regulation Z §1026.34 prohibits enumerated acts and practices for HOEPA high-cost mortgages:
    contractor-payment routing, refinancing within one year, pre-loan counseling, recommended default,
    and financing of points and fees.'
obligations:
- id: reg-z-1026.34-a
  canonical_id: reg-z-1026.34-a
  section: 12 CFR §1026.34(a)
  description: '(a): (a) Prohibited acts or practices for high-cost mortgages —(1) Home improvement contracts.
    A creditor shall not pay a contractor under a home improvement contract from the proceeds of a high-cost
    mortgage, other than:'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: '(a) Prohibited acts or practices for high-cost mortgages —(1) Home improvement contracts.
      A creditor shall not pay a contractor under a home improvement contract from the proceeds of a high-cost
      mortgage, other than:'
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: reg-z-1026.34-i
  canonical_id: reg-z-1026.34-i
  section: 12 CFR §1026.34(i)
  description: '(i): (i) By an instrument payable to the consumer or jointly to the consumer and the contractor;
    or (ii) At the election of the consumer , through a third-party escrow agent in accordance with terms
    established in a written agreement signed by the consumer , the creditor, and the contractor prior
    to the …'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: '(i) By an instrument payable to the consumer or jointly to the consumer and the
      contractor; or (ii) At the election of the consumer , through a third-party escrow agent in accordance
      with terms established in a written agreement signed by the consumer , the creditor, and the contractor
      prior to the disbursement. (2) Notice to assignee. A creditor may not sell or otherwise assign a
      high-cost mortgage without furnishing the following statement to the purchaser or assignee: “Notice:
      This is a mortgage subject to special rules under the Federal Truth in Lending Act . Purchasers
      or assignees of this mortgage could be liable for all claims and defenses with respect to the mortgage
      that the consumer could assert against the creditor.” (3) Refinancings within one-year period. Within
      one year of having extended a high-cost mortgage, a creditor shall not refinance any high-cost mortgage
      to the same consumer into another high-cost mortgage, unless the refinancing is in the consumer
      ''s interest. An assignee holding or servicing a high-cost mortgage shall not, for the remainder
      of the one-year period following the date of origination of the credit, refinance any high-cost
      mortgage to the same consumer into another high-cost mortgage, unless the refinancing is in the
      consumer ''s interest. A creditor (or assignee) is prohibited from engaging in acts or practices
      to evade this provision, including a pattern or practice of arranging for the refinancing of its
      own loans by affiliated or unaffiliated creditors. (4) Repayment ability for high-cost mortgages.
      In connection with an open-end, high-cost mortgage, a creditor shall not open a plan for a consumer
      where credit is or will be extended without regard to the consumer ''s repayment ability as of account
      opening, including the consumer ''s current and reasonably expected income, employment, assets other
      than the collateral, and current obligations including any mortgage-related obligations that are
      required by another credit obligation undertaken prior to or at account opening, and are secured
      by the same dwelling that secures the high-cost mortgage transaction. The requirements set forth
      in § 1026.34(a)(4)(i) through (iv) apply to open-end high-cost mortgages, but do not apply to closed-end
      high-cost mortgages. In connection with a closed-end, high-cost mortgage, a creditor must comply
      with the repayment ability requirements set forth in § 1026.43 . Temporary or “bridge” loans with
      terms of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans
      to sell a current dwelling within twelve months, are exempt from this repayment ability requirement.'
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: reg-z-1026.34-i
  canonical_id: reg-z-1026.34-i
  section: 12 CFR §1026.34(i)
  description: '(i): (i) Mortgage-related obligations. For purposes of this paragraph (a)(4), mortgage-related
    obligations are property taxes; premiums and similar charges identified in § 1026.4(b)(5) , (7), (8),
    and (10) that are required by the creditor; fees and special assessments imposed by a condominium,
    cooperati…'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: '(i) Mortgage-related obligations. For purposes of this paragraph (a)(4), mortgage-related
      obligations are property taxes; premiums and similar charges identified in § 1026.4(b)(5) , (7),
      (8), and (10) that are required by the creditor; fees and special assessments imposed by a condominium,
      cooperative, or homeowners association; ground rent; and leasehold payments. (ii) Basis for determination
      of repayment ability. Under this paragraph (a)(4) a creditor must determine the consumer ''s repayment
      ability in connection with an open-end, high cost mortgage as follows: (A) A creditor must verify
      amounts of income or assets that it relies on to determine repayment ability, including expected
      income or assets, by the consumer ''s Internal Revenue Service Form W-2, tax returns, payroll receipts,
      financial institution records, or other third-party documents that provide reasonably reliable evidence
      of the consumer ''s income or assets. (B) A creditor must verify the consumer ''s current obligations
      , including any mortgage-related obligations that are required by another credit obligation undertaken
      prior to or at account opening, and are secured by the same dwelling that secures the high-cost
      mortgage transaction. (iii) Presumption of compliance. For an open-end, high cost mortgage, a creditor
      is presumed to have complied with this paragraph (a)(4) with respect to a transaction if the creditor:
      (A) Determines the consumer ''s repayment ability as provided in paragraph (a)(4)(ii); (B) Determines
      the consumer ''s repayment ability taking into account current obligations and mortgage-related
      obligations as defined in paragraph (a)(4)(i) of this section, and using the largest required minimum
      periodic payment based on the following assumptions: (1) The consumer borrows the full credit line
      at account opening with no additional extensions of credit; (2) The consumer makes only required
      minimum periodic payments during the draw period and any repayment period; (3) If the annual percentage
      rate may increase during the plan, the maximum annual percentage rate that is included in the contract,
      as required by § 1026.30, applies to the plan at account opening and will apply during the draw
      period and any repayment period. (C) Assesses the consumer ''s repayment ability taking into account
      at least one of the following: The ratio of total current obligations , including any mortgage-related
      obligations that are required by another credit obligation undertaken prior to or at account opening,
      and are secured by the same dwelling that secures the high-cost mortgage transaction, to income,
      or the income the consumer will have after paying current obligations. (iv) Exclusions from presumption
      of compliance. Notwithstanding the previous paragraph, no presumption of compliance is available
      for an open-end, high-cost mortgage transaction for which the regular periodic payments when aggregated
      do not fully amortize the outstanding principal balance except as otherwise provided by § 1026.32(d)(1)(ii)
      . (5) Pre-loan counseling —(i) Certification of counseling required. A creditor shall not extend
      a high-cost mortgage to a consumer unless the creditor receives written certification that the consumer
      has obtained counseling on the advisability of the mortgage from a counselor that is approved to
      provide such counseling by the Secretary of the U.S. Department of Housing and Urban Development
      or, if permitted by the Secretary, by a State housing finance authority. (ii) Timing of counseling.
      The counseling required under this paragraph (a)(5) must occur after: (A) The consumer receives
      either the disclosure required by section 5(c) of the Real Estate Settlement Procedures Act of 1974
      ( 12 U.S.C. 2604(c) ) or the disclosures required by § 1026.40; or (B) The consumer receives the
      disclosures required by § 1026.32(c) , for transactions in which neither of the disclosures listed
      in paragraph (a)(5)(ii)(A) of this section are provided. (iii) Affiliation prohibited. The counseling
      required under this paragraph (a)(5) shall not be provided by a counselor who is employed by or
      affiliated with the creditor. (iv) Content of certification. The certification of counseling required
      under paragraph (a)(5)(i) must include: (A) The name(s) of the consumer(s) who obtained counseling;
      (B) The date(s) of counseling; (C) The name and address of the counselor; (D) A statement that the
      consumer(s) received counseling on the advisability of the high-cost mortgage based on the terms
      provided in either the disclosure required by section 5(c) of the Real Estate Settlement Procedures
      Act of 1974 ( 12 U.S.C. 2604(c) ) or the disclosures required by § 1026.40. (E) For transactions
      for which neither of the disclosures listed in paragraph (a)(5)(ii)(A) of this section are provided,
      a statement that the consumer(s) received counseling on the advisability of the high-cost mortgage
      based on the terms provided in the disclosures required by § 1026.32(c); and (F) A statement that
      the counselor has verified that the consumer(s) received the disclosures required by either § 1026.32(c)
      or the Real Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2601 et seq. ) with respect to
      the transaction.'
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: reg-z-1026.34-v
  canonical_id: reg-z-1026.34-v
  section: 12 CFR §1026.34(v)
  description: '(v): (v) Counseling fees. A creditor may pay the fees of a counselor or counseling organization
    for providing counseling required under this paragraph (a)(5) but may not condition the payment of
    such fees on the consummation or account-opening of a mortgage transaction. If the consumer withdraws
    the appl…'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: (v) Counseling fees. A creditor may pay the fees of a counselor or counseling organization
      for providing counseling required under this paragraph (a)(5) but may not condition the payment
      of such fees on the consummation or account-opening of a mortgage transaction. If the consumer withdraws
      the application that would result in the extension of a high-cost mortgage, a creditor may not condition
      the payment of such fees on the receipt of certification from the counselor required by paragraph
      (a)(5)(i) of this section. A creditor may, however, confirm that a counselor has provided counseling
      to the consumer pursuant to this paragraph (a)(5) prior to paying the fee of a counselor or counseling
      organization. (vi) Steering prohibited. A creditor that extends a high-cost mortgage shall not steer
      or otherwise direct a consumer to choose a particular counselor or counseling organization for the
      counseling required under this paragraph (a)(5). (6) Recommended default. A creditor or mortgage
      broker, as defined in section 1026.36(a)(2) , may not recommend or encourage default on an existing
      loan or other debt prior to and in connection with the consummation or account opening of a high-cost
      mortgage that refinances all or any portion of such existing loan or debt . (7) Modification and
      deferral fees. A creditor, successor-in-interest, assignee, or any agent of such parties may not
      charge a consumer any fee to modify, renew, extend or amend a high-cost mortgage, or to defer any
      payment due under the terms of such mortgage. (8) Late fees —(i) General. Any late payment charge
      imposed in connection with a high-cost mortgage must be specifically permitted by the terms of the
      loan contract or open-end credit agreement and may not exceed 4 percent of the amount of the payment
      past due. No such charge may be imposed more than once for a single late payment. (ii) Timing. A
      late payment charge may be imposed in connection with a high-cost mortgage only if the payment is
      not received by the end of the 15-day period beginning on the date the payment is due or, in the
      case of a high-cost mortgage on which interest on each installment is paid in advance, the end of
      the 30-day period beginning on the date the payment is due. (iii) Multiple late charges assessed
      on payment subsequently paid. A late payment charge may not be imposed in connection with a high-cost
      mortgage payment if any delinquency is attributable only to a late payment charge imposed on an
      earlier payment, and the payment otherwise is a full payment for the applicable period and is paid
      by the due date or within any applicable grace period. (iv) Failure to make required payment. The
      terms of a high-cost mortgage agreement may provide that any payment shall first be applied to any
      past due balance. If the consumer fails to make a timely payment by the due date and subsequently
      resumes making payments but has not paid all past due payments, the creditor may impose a separate
      late payment charge for any payment(s) outstanding (without deduction due to late fees or related
      fees) until the default is cured. (9) Payoff statements —(i) Fee prohibition. In general, a creditor
      or servicer (as defined in 12 CFR 1024.2 (b)) may not charge a fee for providing to a consumer ,
      or a person authorized by the consumer to obtain such information, a statement of the amount due
      to pay off the outstanding balance of a high-cost mortgage. (ii) Processing fee. A creditor or servicer
      may charge a processing fee to cover the cost of providing a payoff statement, as described in paragraph
      (a)(9)(i) of this section, by fax or courier, provided that such fee may not exceed an amount that
      is comparable to fees imposed for similar services provided in connection with consumer credit transactions
      that are secured by the consumer 's principal dwelling and are not high-cost mortgages. A creditor
      or servicer shall make a payoff statement available to a consumer , or a person authorized by the
      consumer to obtain such information, by a method other than by fax or courier and without charge
      pursuant to paragraph (a)(9)(i) of this section. (iii) Processing fee disclosure. Prior to charging
      a processing fee for provision of a payoff statement by fax or courier, as permitted pursuant to
      paragraph (a)(9)(ii) of this section, a creditor or servicer shall disclose to a consumer or a person
      authorized by the consumer to obtain the consumer 's payoff statement that payoff statements, as
      described in paragraph (a)(9)(i) of this section, are available by a method other than by fax or
      courier without charge. (iv) Fees permitted after multiple requests. A creditor or servicer that
      has provided a payoff statement, as described in paragraph (a)(9)(i) of this section, to a consumer
      , or a person authorized by the consumer to obtain such information, without charge, other than
      the processing fee permitted under paragraph (a)(9)(ii) of this section, four times during a calendar
      year, may thereafter charge a reasonable fee for providing such statements during the remainder
      of the calendar year. Fees for payoff statements provided to a consumer , or a person authorized
      by the consumer to obtain such information, in a subsequent calendar year are subject to the requirements
      of this section.
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: reg-z-1026.34-v
  canonical_id: reg-z-1026.34-v
  section: 12 CFR §1026.34(v)
  description: '(v): (v) Timing of delivery of payoff statements. A payoff statement, as described in
    paragraph (a)(9)(i) of this section, for a high-cost mortgage shall be provided by a creditor or servicer
    within five business days after receiving a request for such statement by a consumer or a person authorized
    by th…'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: (v) Timing of delivery of payoff statements. A payoff statement, as described in
      paragraph (a)(9)(i) of this section, for a high-cost mortgage shall be provided by a creditor or
      servicer within five business days after receiving a request for such statement by a consumer or
      a person authorized by the consumer to obtain such statement. (10) Financing of points and fees.
      A creditor that extends credit under a high-cost mortgage may not finance charges that are required
      to be included in the calculation of points and fees, as that term is defined in § 1026.32(b)(1)
      and (2) . Credit insurance premiums or debt cancellation or suspension fees that are required to
      be included in points and fees under § 1026.32(b)(1)(iv) or (2)(iv) shall not be considered financed
      by the creditor when they are calculated and paid in full on a monthly basis.
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: reg-z-1026.34-b
  canonical_id: reg-z-1026.34-b
  section: 12 CFR §1026.34(b)
  description: '(b): (b) Prohibited acts or practices for dwelling-secured loans; structuring loans to
    evade high-cost mortgage requirements. A creditor shall not structure any transaction that is otherwise
    a high-cost mortgage in a form, for the purpose, and with the intent to evade the requirements of
    a high-cost mort…'
  type: dont
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 12 CFR §1026.34(a)(1)
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1026.34
    snapshot_id: 752488426a309611
    fetched_at: '2026-05-22T18:22:24Z'
    content_hash: sha256:ae344db8fbdcbc05f80695b8927a03cdff511ec9b588d02886f152eb5234eb3d
    paragraph_quote: (b) Prohibited acts or practices for dwelling-secured loans; structuring loans to
      evade high-cost mortgage requirements. A creditor shall not structure any transaction that is otherwise
      a high-cost mortgage in a form, for the purpose, and with the intent to evade the requirements of
      a high-cost mortgage subject to this subpart, including by dividing any loan transaction into separate
      parts. [ 78 FR 6964 , Jan. 31, 2013, as amended at 78 FR 30745 , May 23, 2013; 78 FR 63005 , Oct.
      23, 2013] Truth in Lending Act Real Estate Settlement Procedures Act of 1974 CFR Toolbox Law about...
      Articles from Wex Table of Popular Names Parallel Table of Authorities Accessibility About LII Contact
      us Advertise here Help Terms of use Privacy
    drafter_attestation: Verbatim subsection of 12 CFR §1026.34 from Cornell LII snapshot 752488426a309611;
      body isolated between nav and notes; substring-verified.
  judgment: false
