The CFPB has adopted changes to its Reg Z commentary to memorialize the calculation methods used each year to adjust the thresholds for exempt consumer credit transactions and for transactions exempt from the special appraisal requirements for higher-priced mortgage loans and to its Reg M commentary to memorialize the calculation method used each year to adjust the threshold for exempt consumer leases. The Fed and OCC have adopted corresponding changes to their commentaries. The changes are effective January 1, 2017.
Each agency’s rules and accompanying commentaries provide that the exemption thresholds will be adjusted annually effective January 1 of each year based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. If there is no annual percentage increase in the CPI-W, the agencies do not adjust the exemption thresholds from the prior year. The agencies base this position on Section 1100E(b) of the Dodd-Frank Act, which states that the thresholds must be adjusted by the “annual percentage increase” in the CPI-W (emphasis added).
New commentary adopted by each agency:
- provides that if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year.
- sets forth the calculation method the agencies will use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year.
The agencies also announced that based on these calculation methods, they have made no changes to the three exemption thresholds. Effective January 1, 2017 through December 31, 2017, these exemption thresholds remain as follows:
- smaller loans exempt from the appraisal requirement for “higher priced mortgage loans,” $25,500
- consumer credit transactions exempt from Truth in Lending Act/Regulation Z, $54,600 (but loans secured by real property or personal property used or expected to be used as a consumer’s principal dwelling and private education loans are covered regardless of amount)
- consumer leases exempt from Consumer Leasing Act/Regulation M, $54,600