Two important updates impacting compliance with the Truth in Lending Act (TILA) and Reg Z have just been announced.

The TILA Examination Procedures have been revised and updated to reflect four final rules that amend the qualified mortgage (QM) provisions of Regulation Z. The rules in question were issued by the Consumer Financial Protection Bureau (CFPB) in 2020 and 2021. The updates reflect changes to the definition of a General QM loan and the addition of a new category of QM, Seasoned QM loans. The TILA Interagency Examination Procedures are developed by the Federal Financial Institutions Examination Council (FFIEC), which consists of the Board of Governors of the Federal Reserve System; the Federal Deposit Insurance Corporation; the Consumer Financial Protection Bureau; the Office of the Comptroller of the Currency; the National Credit Union Administration; and the FFIEC’s State Liaison Committee.

In addition, the CFPB has issued a final rule adjusting the TILA dollar amounts for certain provisions, including under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), where appropriate, based on the annual percentage change reflected in the consumer price index (CPI). The rule takes effect on January 1, 2022.

Specifically, the final rule provides for the following adjustments:

• For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00 in 2022.
• For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount in 2022 for the safe harbor for a first violation penalty fee will increase to $30, and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will increase to $41.
• For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2022 will be $22,969, and the adjusted points and fees dollar trigger for high-cost mortgages in 2022 will be $1,148.
• For QMs under the General QM loan definition in Section 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) in 2022 will be:
  • 25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $114,847;
  • 5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $68,908 but less than $114,847;
  • 5 or more percentage points for a first-lien covered transaction with a loan amount less than $68,908;
  • 5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $114,847;
  • 5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $68,908; or
  • 5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $68,908.
• For all categories of QMs, the thresholds for total points and fees in 2022 will be:
  • 3% of the total loan amount for a loan greater than or equal to $114,847;
  • $3,445 for a loan amount greater than or equal to $68,908, but less than $114,847;
  • 5% of the total loan amount for a loan greater than or equal to $22,969, but less than $68,908;
  • $1,148 for a loan amount greater than or equal to$14,356, but less than $22,969; and
  • 8% of the total loan amount for a loan amount less than $14,356.

Finally, we expect the CFPB to announce, within the next month, whether the exemption threshold for consumer credit transactions, effective as of January 1, 2022, will remain at $58,300 or be subject to an increase, based on the CPI. This important adjustment will be reported here when announced.