The CFPB has published a final rule regarding various annual adjustments it is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank. The adjustments reflect changes in the Consumer Price Index in effect on June 1, 2018 and will take effect January 1, 2019.
CARD Act. The CARD Act requires the CFPB to calculate annual adjustments of (1) the minimum interest charge threshold that triggers disclosure of the minimum interest charge in credit card applications, solicitations and account opening disclosures, and (2) the fee thresholds for the penalty fees safe harbor. The calculation did not result in a change for 2019 to the current minimum interest charge threshold (which requires disclosure of any minimum interest charge above $1.00). However, it did result in a change for 2019 to the first and subsequent violation safe harbor penalty fees. Such fees were increased to $28 (currently $270 and $39 (currently $38), respectively.
HOEPA. HOEPA requires the CFPB to annually adjust the total loan amount and fee thresholds that determine whether a transaction is a high cost mortgage. In the final rule, for 2019, the CFPB increased the current total loan amount threshold from $21,032 to $21,549, and the current points and fees threshold from $1,029 to $1,052. As a result, in 2019, a transaction will be a high-cost mortgage (1) if the total loan amount is $21,549 or more and the points and fees exceed 5 percent of the total loan amount, or (2) if the total loan amount is less than $21,549 and the points and fees exceed the lesser of $1,077 or 8 percent of the total loan amount.
Ability to repay/QM rule. Pursuant to its ability to repay/QM rule, the CFPB must annually adjust the points and fees limits that a loan cannot exceed to satisfy the requirements for a QM. The CFPB must also annually adjust the related loan amount limits. In the final rule, the CFPB increased these limits for 2019 to the following:
- For a loan amount greater than or equal to $107,747 (currently $105,158), points and fees may not exceed 3 percent of the total loan amount
- For a loan amount greater than or equal to $64,648 (currently $63,095) but less than $107,747, points and fees may not exceed $3,232
- For a loan amount greater than or equal to $21,549 (currently $21,032) but less than $64,648, points and fees may not exceed 5 percent of the total loan amount
- For a loan amount greater than or equal to $13,468 (currently $13,145) but less than $21,549, points and fees may not exceed $1,077
- For a loan amount less than $13,468 (currently $13,145), points and fees may not exceed 8 percent of the total loan amount