The Consumer Financial Protection Bureau (CFPB) recently published the annual threshold adjustments which become effective January 1, 2022. These threshold adjustments impact certain dollar amounts for several sections of Regulation Z: specifically, penalty fee safe harbor amounts under the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), HOEPA thresholds, and qualified mortgage thresholds.
The first adjustment impacts financial institutions issuing consumer credit cards. Regulation Z provides limitations on fees associated with a consumer credit card. Specifically, Regulation Z provides safe harbor amounts for issuers imposing credit card fees for violating terms of a credit card agreement, examples of these fees include late payment fees, returned payment fees, and fees for exceeding the credit limit. The card issuer can impose fees, so long as they do not exceed the dollar amount specified in Regulation Z; safe harbor amounts contemplate first violations and multiple violations of the same type. For 2022, these safe harbor amounts will increase; for a first violation, the safe harbor will increase from $27 to $30, and the threshold for multiple violations of the same type from $38 to $41.
The next adjustments are specific to high-cost home loan thresholds. A consumer credit transaction secured by the consumer’s principal dwelling is a high-cost home loan if the point and fees exceed the thresholds identified in Regulation Z. The loan amount threshold will increase from $20,000 to $22,696, and the points and fee dollar amount threshold will increase from $1,000 to $1,148.
The final adjustments are specific to qualified mortgages as defined by Regulation Z. A transaction is a qualified mortgage if the annual percentage rate (APR) does not exceed the average prime offer rate (APOR) of a comparable transaction by more than the established thresholds and where the points and fees do not exceed the published amounts.
For the APR calculation, the annual adjustments impact only the loan amount thresholds; for a first lien covered transaction the loan amount thresholds are as follows:
- If 2.25%, then the loan amount will increase from $110,260 to $114,485.
- If 3.5%, then the loan amounts will increase from $66,156 to $68,908 and $110,260 to $114,485, respectively.
- If 6.5%, then the loan amount will increase from $66,156 to $89,908.
For the points and fees calculations, the annual adjustments to the transaction amount are as follows:
- $100,000 increases to $114,847
- $60,000 increases to $68,908
- $20,000 increases to $22,969
- $12,500 increases to $14,356
The dollar amount of the points and fees have been adjusted as follows; there were no adjustments made to the percentage-based thresholds:
- $3,000 increases to $3,445
- $1,000 increases to $1,148
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