On December 23, 2022, the Consumer Financial Protection Bureau (CFPB) issued its final rule regarding the 2023 annual adjustments for several provisions implementing the Truth in Lending Act (TILA) and amendments to TILA, including under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), Home Ownership and Equity Protection Act of 1994 (HOEPA), and qualified mortgage provisions under the Dodd-Frank Act. The 2023 adjustments did not include adjustments to the credit card penalty fees safe harbor. The 2023 threshold updates are as follows: 

  • CARD Act: The minimum interest charge amounts for §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for the year 2023. Accordingly, the CFPB is not amending these sections of Regulation Z. The notice does not mention the credit card penalty fees safe harbors, which are set forth in Regulation Z Section 1026.52(b)(1)(ii)(A) and (B). 
  • HOEPA: The CFPB increased the total loan amount threshold to $24,866 and the current points and fees threshold to $1,243.  As a result, in 2023, a transaction will be a high-cost mortgage (1) if the total loan amount is $24,866 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 $24,866 and the points and fees exceed the lesser of $1,243 or 8 percent of the total loan amount. 
  • Qualified Mortgage (QM) Rule: The CFPB’s ability to repay/QM rule provides for the CFPB to 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. The CFPB increased these limits for 2023 to the following: 
  • For a loan amount greater than or equal to $124,331, points and fees may not exceed 3 percent of the total loan amount;
  • For a loan amount greater than or equal to $74,599 but less than $124,331, points and fees may not exceed $3,730; 
  • For a loan amount greater than or equal to $24,866 but less than $74,599, points and fees may not exceed 5 percent of the total loan amount; 
  • For a loan amount greater than or equal to $15,541 but less than $24,866, points and fees may not exceed $1,243; and 
  • For a loan amount less than $15,541, points and fees may not exceed 8 percent of the total loan amount. 

The adjustments reflect changes in the Consumer price Index (CPI), and the final rule is effective January 1, 2023. It is important to note that the CFPB published these changes much later than expected, giving mortgage lenders little time to implement them by the January 1, 2023, effective date. To view the final rule in its entirety, please visit this link.