CFPB publishes annual CARD Act, HOEPA, QM adjustments (UPDATED)

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The CFPB recently 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, 2021 and will take effect January 1, 2022.

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 2022 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 2022 to the first and subsequent violation safe harbor penalty fees.  Such fees were increased to $30 and $41, 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 2022, the CFPB increased the total loan amount threshold to $22,969, and the current points and fees threshold to $1,148.  As a result, in 2022, a transaction will be a high-cost mortgage (1) if the total loan amount is $22,969 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 $22,969 and the points and fees exceed the lesser of $1,148 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 2022 to the following:

  • For a loan amount greater than or equal to $114,847, points and fees may not exceed 3 percent of the total loan amount
  • For a loan amount greater than or equal to $68,908 but less than $114,847, points and fees may not exceed $3,445
  • For a loan amount greater than or equal to $22,969 but less than $68,908, points and fees may not exceed 5 percent of the total loan amount
  • For a loan amount greater than or equal to $14,356 but less than $22,969, points and fees may not exceed $1,148
  • For a loan amount less than $14,356, points and fees may not exceed 8 percent of the total loan amount

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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