Rule2021-23478
Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 2, 2021
Effective
January 1, 2022
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule amending the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule revises, as applicable, the dollar amounts for provisions implementing TILA and amendments to TILA, 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). The Bureau is adjusting these amounts, where appropriate, based on the annual percentage change reflected in the Consumer Price Index (CPI) in effect on June 1, 2021.
Full Text
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<title>Federal Register, Volume 86 Issue 209 (Tuesday, November 2, 2021)</title>
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[Federal Register Volume 86, Number 209 (Tuesday, November 2, 2021)]
[Rules and Regulations]
[Pages 60357-60364]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23478]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
Truth in Lending (Regulation Z) Annual Threshold Adjustments
(Credit Cards, HOEPA, and Qualified Mortgages)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; official interpretation.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing this final rule amending the regulation text and official
interpretations for Regulation Z, which implements the Truth in Lending
Act (TILA). The Bureau is required to calculate annually the dollar
amounts for several provisions in Regulation Z; this final rule
revises, as applicable, the dollar amounts for provisions implementing
TILA and amendments to TILA, 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). The Bureau is adjusting these amounts, where appropriate, based
on the annual percentage change reflected in the Consumer Price Index
(CPI) in effect on June 1, 2021.
DATES: This final rule is effective January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Willie Williams, Paralegal Specialist;
or Lanique Eubanks, Senior Counsel, Office of Regulations, at (202)
435-7700. If you require this document in an alternative electronic
format, please contact <a href="/cdn-cgi/l/email-protection#20636670627f6143434553534942494c49545960434650420e474f56"><span class="__cf_email__" data-cfemail="7e3d382e3c213f1d1d1b0d0d171c1712170a073e1d180e1c50191108">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Bureau is amending the regulation text
and official interpretations for Regulation Z, which implements TILA,
to update the dollar amounts of various thresholds that are adjusted
annually based on the annual percentage change in the CPI as published
by the Bureau of Labor Statistics (BLS). Specifically, 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.
The adjusted points-and-fees dollar trigger for high-cost mortgages in
2022 will be $1,148. For qualified mortgages (QMs) under the General QM
loan definition in Sec. 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: 2.25 or more percentage points for a
first-lien covered transaction with a loan amount greater than or equal
to $114,847; 3.5 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; 6.5 or more percentage points for a first-lien
covered transaction with a loan amount less than $68,908; 6.5 or more
percentage points for a first-lien covered transaction secured by a
manufactured home with a loan amount less than $114,847; 3.5 or more
percentage points for a subordinate-lien covered transaction with a
loan amount greater than or equal to $68,908; or 6.5 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
[[Page 60358]]
fees in 2022 will be 3 percent 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 percent 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 percent of the total loan amount for a loan
amount less than $14,356.\1\
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\1\ The QM categories in Regulation Z are as follows: 12 CFR
1026.43(e)(2), (4), (5), and (6) applies only to covered
transactions for which the application was received before April 1,
2016; and (e)(7).
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I. Background
A. Credit Card Annual Adjustments
Minimum Interest Charge Disclosure Thresholds
Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z
implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections
1026.6(b)(2)(iii) and 1026.60(b)(3) require creditors to disclose any
minimum interest charge exceeding $1.00 that could be imposed during a
billing cycle. These provisions also state that, for open-end consumer
credit plans, the minimum interest charge thresholds will be re-
calculated annually using the CPI that was in effect on the preceding
June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W) for this adjustment.\2\ If the cumulative
change in the adjusted minimum value derived from applying the annual
CPI-W level to the current amounts in Sec. Sec. 1026.6(b)(2)(iii) and
1026.60(b)(3) has risen by a whole dollar, the minimum interest charge
amounts set forth in the regulation will be increased by $1.00. This
adjustment analysis is based on the CPI-W index in effect on June 1,
2021, which was reported by BLS on May 12, 2021,\3\ and reflects the
percentage change from April 2020 to April 2021. The adjustment
analysis accounts for a 4.7 percent increase in the CPI-W from April
2020 to April 2021. This increase in the CPI-W when applied to the
current amounts in Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) does
not trigger an increase in the minimum interest charge threshold of at
least $1.00, and the Bureau is therefore not amending Sec. Sec.
1026.6(b)(2)(iii) and 1026.60(b)(3).
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\2\ The CPI-W is a subset of the Consumer Price Index for All
Urban Consumers (CPI-U) index and represents approximately 29
percent of the U.S. population.
\3\ BLS publishes Consumer Price Indices monthly, usually in the
middle of each calendar month. Thus, the CPI-W reported on May 12,
2021, was the most current as of June 1, 2021.
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Safe Harbor Penalty Fees
Section 1026.52(b)(1)(ii)(A) and (B) of Regulation Z implements
section 149(e) of TILA, which was added to TILA by the CARD Act.\4\
Section 1026.52(b)(1)(ii)(D) provides that the safe harbor provision,
which establishes the permissible penalty fee thresholds in Sec.
1026.52(b)(1)(ii)(A) and (B), will be re-calculated annually using the
CPI that was in effect on the preceding June 1; the Bureau uses the
CPI-W for this adjustment. If the cumulative change in the adjusted
value derived from applying the annual CPI-W level to the current
amounts in Sec. 1026.52(b)(1)(ii)(A) and (B) has risen by a whole
dollar, those amounts will be increased by $1.00. Similarly, if the
cumulative change in the adjusted value derived from applying the
annual CPI-W level to the current amounts in Sec. 1026.52(b)(1)(ii)(A)
and (B) has decreased by a whole dollar, those amounts will be
decreased by $1.00. See comment 52(b)(1)(ii)-2. The 2022 adjustment
analysis is based on the CPI-W index in effect on June 1, 2021, which
was reported by BLS on May 12, 2021, and reflects the percentage change
from April 2020 to April 2021. The permissible fee thresholds increased
to $30 for a first violation penalty fee and $41 for a subsequent
violation reflect a 4.7 percent increase in the CPI-W from April 2020
to April 2021 with the resulting thresholds rounded to the nearest $1
increment.
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\4\ Credit Card Accountability Responsibility and Disclosure Act
of 2009, Public Law 111-24, 123 Stat. 1734 (2009).
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B. HOEPA Annual Threshold Adjustments
Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431
of the Dodd-Frank Act,\5\ which amended the HOEPA points-and-fees
coverage test. Under Sec. 1026.32(a)(1)(ii)(A) and (B), in assessing
whether a transaction is a high-cost mortgage due to points and fees
the creditor is charging, the applicable points-and-fees coverage test
depends on whether the total loan amount is for $20,000 or more, or for
less than $20,000. Section 1026.32(a)(1)(ii) provides that this
threshold amount be recalculated annually using the CPI index in effect
on the preceding June 1; the Bureau uses the CPI-U for this
adjustment.\6\ The 2022 adjustment is based on the CPI-U index in
effect on June 1, which was reported by BLS on May 12, 2021, and
reflects the percentage change from April 2020 to April 2021. The
adjustment to $22,969 here reflects a 4.2 percent increase in the CPI-U
index from April 2020 to April 2021 and is rounded to the nearest whole
dollar amount for ease of compliance.
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\5\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376 (2010).
\6\ The CPI-U is based on all urban consumers and represents
approximately 93 percent of the U.S. population.
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Under Sec. 1026.32(a)(1)(ii)(B) the HOEPA points-and-fees
threshold is $1,000. Section 1026.32(a)(1)(ii)(B) provides that this
threshold amount will be recalculated annually using the CPI index in
effect on the preceding June 1; the Bureau uses the CPI-U for this
adjustment. The 2022 adjustment is based on the CPI-U index in effect
on June 1, 2021, which was reported by BLS on May 12, 2021, and
reflects the percentage change from April 2020 to April 2021. The
adjustment to $1,148 here reflects a 4.2 percent increase in the CPI-U
index from April 2020 to April 2021 and is rounded to the nearest whole
dollar amount for ease of compliance.
C. QM Annual Threshold Adjustments
The Bureau's Regulation Z implements sections 1411 and 1412 of the
Dodd-Frank Act, which generally require creditors to make a reasonable,
good-faith determination of a consumer's ability to repay any consumer
credit transaction secured by a dwelling and establishes certain
protections from liability under this requirement for QMs.
On December 10, 2020, the Bureau issued a final rule amending the
General QM loan definition in Sec. 1026.43(e)(2).\7\ The final rule
established pricing thresholds in Sec. 1026.43(e)(2)(vi)(A) through
(F) based on the spread of a loan's APR compared to the APOR for a
comparable transaction as of the date the interest rate is set. To
satisfy the General QM loan definition, a loan's APR must be below the
applicable pricing threshold and satisfy other requirements in Sec.
1026.43(e)(2). Specifically, under Sec. 1026.43(e)(2)(vi), a covered
transaction is a QM if the APR does not exceed the APOR for a
comparable transaction as of the date the interest rate is set by: 2.25
or more
[[Page 60359]]
percentage points for a first-lien covered transaction with a loan
amount greater than or equal to $110,260 (indexed for inflation); 3.5
or more percentage points for a first-lien covered transaction with a
loan amount greater than or equal to $66,156 (indexed for inflation)
but less than $110,260 (indexed for inflation); 6.5 or more percentage
points for a first-lien covered transaction with a loan amount less
than $66,156 (indexed for inflation); 6.5 or more percentage points for
a first-lien covered transaction secured by a manufactured home with a
loan amount less than $110,260 (indexed for inflation); 3.5 or more
percentage points for a subordinate-lien covered transaction with a
loan amount greater than or equal to $66,156 (indexed for inflation);
or 6.5 or more percentage points for a subordinate-lien covered
transaction with a loan amount less than $66,156 (indexed for
inflation).\8\ The rule states that the loan amounts in Sec.
1026.43(e)(2)(vi) will be adjusted annually on January 1 by the annual
percentage change in the CPI-U that was in effect on the preceding June
1.\9\ Section 1026.43(e)(2)(vi) of Regulation Z is also amended to add
a cross-reference to the official commentary of Regulation Z where
historical threshold dollar amounts for Sec. 1026.43(e)(2)(vi)(A)
through (F) can be located. This change to the regulatory text will
assist creditors in locating the applicable threshold adjustments.
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\7\ 85 FR 86308 (Dec. 29, 2020). This final rule was initially
effective on March 1, 2021, with a mandatory compliance date of July
1, 2021. On April 27, 2021, the Bureau issued a final rule effective
June 30, 2021, which extended the mandatory compliance date of the
final rule published on December 29, 2020, at 85 FR 86308, until
October 1, 2022. 86 FR 22844 (Apr. 30, 2021).
\8\ The loan amounts in the regulatory text reflect the CPI-U in
effect on June 1, 2020.
\9\ See comment 43(e)(2)(vi)-3.
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Regulation Z also contains points and fees limits applicable to all
categories of QMs. Under Sec. 1026.43(e)(3)(i), a covered transaction
is not a QM if the transaction's total points and fees exceed: 3
percent of the total loan amount for a loan amount greater than or
equal to $100,000; $3,000 for a loan amount greater than or equal to
$60,000 but less than $100,000; 5 percent of the total loan amount for
loans greater than or equal to $20,000 but less than $60,000; $1,000
for a loan amount greater than or equal to $12,500 but less than
$20,000; or 8 percent of the total loan amount for loans less than
$12,500. Section 1026.43(e)(3)(ii) provides that the limits and loan
amounts in Sec. 1026.43(e)(3)(i) will be recalculated annually for
inflation using the CPI-U index in effect on the preceding June 1.
The 2022 adjustment to the loan amounts applicable to the pricing
thresholds for the General QM loan definition and the points and fees
limits for all categories of QM is based on the CPI-U index in effect
on June 1, 2021, which was reported by BLS on May 12, 2021, and
reflects the percentage change from April 2020 to April 2021. The
adjustment to the 2021 figures \10\ being adopted here reflects a 4.2
percent increase in the CPI-U index for this period and is rounded to
whole dollars for ease of compliance.
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\10\ For 2022, a covered transaction is a qualified mortgage if
the APR does not exceed the APOR for a comparable transaction as of
the date the interest rate is set by: 2.25 or more percentage points
for a first-lien covered transaction with a loan amount greater than
or equal to $114,847; 3.5 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; 6.5 or more percentage points for a
first-lien covered transaction with a loan amount less than $68,908;
6.5 or more percentage points for a first-lien covered transaction
secured by a manufactured home with a loan amount less than
$114,847; 3.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount greater than or equal to
$68,908; or 6.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount less than $68,908.
Additionally, a covered transaction is not a qualified mortgage if
the transaction's total points and fees exceed 3 percent of the
total loan amount for a loan amount 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 percent of the total loan amount for loans
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;
or 8 percent of the total loan amount for loans less than $14,356.
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II. Adjustment and Commentary Revision
A. Credit Card Annual Adjustments
Minimum Interest Charge Disclosure Thresholds--Sec. Sec.
1026.6(b)(2)(iii) and 1026.60(b)(3)
The minimum interest charge amounts for Sec. Sec.
1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for
the year 2022. Accordingly, the Bureau is not amending these sections
of Regulation Z.
Safe Harbor Penalty Fees--Sec. 1026.52(b)(1)(ii)(A) and (B)
Effective January 1, 2022, the permissible fee threshold amounts
increased from the amounts for 2021 to $30 for Sec.
1026.52(b)(1)(ii)(A) and to $41 for Sec. 1026.52(b)(1)(ii)(B).
Accordingly, the Bureau is amending Sec. 1026.52(b)(1)(ii)(A) and (B).
The Bureau is amending comment 52(b)(1)(ii)-2.i to preserve a list of
the historical thresholds for this provision.
B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3
Effective January 1, 2022, for purposes of determining under Sec.
1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to
which a transaction is subject, the total loan amount threshold is
$22,969, and the adjusted points-and-fees dollar trigger under Sec.
1026.32(a)(1)(ii)(B) is $1,148. If the total loan amount for a
transaction is $22,969 or more, and the points-and-fees amount exceeds
5 percent of the total loan amount, the transaction is a high-cost
mortgage. If the total loan amount for a transaction is less than
$22,969, and the points-and-fees amount exceeds the lesser of the
adjusted points-and-fees dollar trigger of $1,148 or 8 percent of the
total loan amount, the transaction is a high-cost mortgage. The Bureau
is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments
for each year, to reflect for 2022 the new points-and-fees dollar
trigger and the new loan amount dollar threshold, respectively.
C. Qualified Mortgages Annual Threshold Adjustments
Effective January 1, 2022, to satisfy Sec. 1026.43(e)(2)(vi) under
the General QM loan definition, the APR may not exceed the average
prime offer rate for a comparable transaction as of the date the
interest rate is set by the following amounts: 2.25 or more percentage
points for a first-lien covered transaction with a loan amount greater
than or equal to $114,847; 3.5 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; 6.5 or more percentage points for a
first-lien covered transaction with a loan amount less than $68,908;
6.5 or more percentage points for a first-lien covered transaction
secured by a manufactured home with a loan amount less than $114,847;
3.5 or more percentage points for a subordinate-lien covered
transaction with a loan amount greater than or equal to $68,908; or 6.5
or more percentage points for a subordinate-lien covered transaction
with a loan amount less than $68,908. Accordingly, the Bureau is
amending comment 43(e)(2)(vi)-3, which lists the adjustments for each
year, to reflect the new dollar threshold amounts for Sec.
1026.43(e)(2)(vi)(A) through (F).
Effective January 1, 2022, a covered transaction is not a qualified
mortgage if, pursuant to Sec. 1026.43(e)(3), the transaction's total
points and fees exceed 3 percent of the total loan amount for a loan
amount 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 percent of
the total loan amount for loans 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; or 8 percent of the total loan amount
for loans less than $14,356. The Bureau is amending comment
43(e)(3)(ii)-1, which lists the
[[Page 60360]]
adjustments for each year, to reflect the new dollar threshold amounts
for 2022.
III. Procedural Requirements
A. Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the Bureau finds that notice and
public comment are impracticable, unnecessary, or contrary to the
public interest.\11\ Pursuant to this final rule, in Regulation Z,
Sec. 1026.52(b)(1)(ii)(A) and (B) in subpart G is amended and comments
32(a)(1)(ii)-1.vii and -3.vii, 43(e)(3)(ii)-1.vii, and 52(b)(1)(ii)-
2.i.H in Supplement I are added to update the exemption thresholds. The
amendments in this final rule are technical and non-discretionary, as
they merely apply the method previously established in Regulation Z for
determining adjustments to the thresholds. Section 1026.43(e)(2)(vi) of
Regulation Z is also amended to add a cross-reference to the official
commentary of Regulation Z where historical threshold dollar amounts
for Sec. 1026.43(e)(2)(vi)(A) through (F) can be located. This
amendment is technical and for informational purposes only, as it
merely provides a cross-reference to existing commentary that will list
current and past threshold adjustments already required by Regulation
Z. For these reasons, the Bureau has determined that publishing a
notice of proposed rulemaking and providing opportunity for public
comment are unnecessary. The amendments therefore are adopted in final
form.
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\11\ 5 U.S.C. 553(b)(B).
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B. Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\12\
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\12\ 5 U.S.C. 603(a), 604(a).
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C. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\13\ the
Bureau reviewed this final rule. No collections of information pursuant
to the Paperwork Reduction Act are contained in the final rule.
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\13\ 44 U.S.C. 3506; 5 CFR part 1320.
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D. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Bureau will submit a report containing this rule and other required
information to the United States Senate, the United States House of
Representatives, and the Comptroller General of the United States prior
to the rule taking effect. The Office of Information and Regulatory
Affairs (OIRA) has designated this rule as not a ``major rule'' as
defined by 5 U.S.C. 804(2).
E. Signing Authority
The Associate Director of Research, Markets, and Regulations, Janis
K. Pappalardo, having reviewed and approved this document, is
delegating the authority to electronically sign this document to Laura
Galban, Bureau Federal Register Liaison, for purposes of publication in
the Federal Register.
List of Subjects in 12 CFR Part 1026
Advertising, Banks, Banking, Consumer protection, Credit, Credit
unions, Mortgages, National banks, Reporting and recordkeeping
requirements, Savings associations, Truth-in-lending.
Authority and Issuance
For the reasons set forth in the preamble, the Bureau amends
Regulation Z, 12 CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
1. The authority citation for part 1026 continues to read as follows:
Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353,
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.
Subpart E--Special Rules for Certain Home Mortgage Transactions
0
2. Amend Sec. 1026.43 by revising paragraph (e)(2)(vi) introductory
text to read as follows:
Sec. 1026.43 Minimum standards for transactions secured by a
dwelling.
* * * * *
(e) * * *
(2) * * *
(vi) For which the annual percentage rate does not exceed the
average prime offer rate for a comparable transaction as of the date
the interest rate is set by the amounts specified in paragraphs
(e)(2)(vi)(A) through (F) of this section. The amounts specified here
shall be adjusted annually on January 1 by the annual percentage change
in the Consumer Price Index for All Urban Consumers (CPI-U) that was
reported on the preceding June 1. For purposes of this paragraph
(e)(2)(vi), the creditor must determine the annual percentage rate for
a loan for which the interest rate may or will change within the first
five years after the date on which the first regular periodic payment
will be due by treating the maximum interest rate that may apply during
that five-year period as the interest rate for the full term of the
loan. See the official commentary to this paragraph (e)(2)(vi) for the
current dollar amounts.
* * * * *
Subpart G--Special Rules Applicable to Credit Card Accounts and
Open-End Credit Offered to College Students
0
3. Amend Sec. 1026.52 by revising paragraphs (b)(1)(ii)(A) and (B) to
read as follows:
Sec. 1026.52 Limitations on fees.
* * * * *
(b) * * *
(1) * * *
(ii) * * *
(A) $30;
(B) $41 if the card issuer previously imposed a fee pursuant to
paragraph (b)(1)(ii)(A) of this section for a violation of the same
type that occurred during the same billing cycle or one of the next six
billing cycles; or
* * * * *
0
4. In Supplement I to part 1026:
0
a. Under Section 1026.32--Requirements for High-Cost Mortgages,
Paragraph 32(a)(1)(ii) is revised.
0
b. Under Section 1026.43--Minimum Standards for Transactions Secured by
a Dwelling, Paragraphs 43(e)(2)(vi) and 43(e)(3)(ii) are revised.
0
c. Under Section 1026.52--Limitations on Fees, 52(b)(1)(ii) Safe
harbors is revised.
The revisions read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Section 1026.32--Requirements for High-Cost Mortgages
* * * * *
Paragraph 32(a)(1)(ii).
1. Annual adjustment of $1,000 amount. The $1,000 figure in
Sec. 1026.32(a)(1)(ii)(B) is adjusted annually on January 1 by the
annual percentage change in the CPI that was in effect on the
preceding June 1. The Bureau will publish adjustments after the June
figures become available each year.
i. For 2015, $1,020, reflecting a 2 percent increase in the CPI-
U from June 2013 to June 2014, rounded to the nearest whole dollar.
ii. For 2016, $1,017, reflecting a 0.2 percent decrease in the
CPI-U from June 2014 to June 2015, rounded to the nearest whole
dollar.
iii. For 2017, $1,029, reflecting a 1.1 percent increase in the
CPI-U from June 2015 to June 2016, rounded to the nearest whole
dollar.
iv. For 2018, $1,052, reflecting a 2.2 percent increase in the
CPI-U from June 2016 to June 2017, rounded to the nearest whole
dollar.
v. For 2019, $1,077, reflecting a 2.5 percent increase in the
CPI-U from June 2017 to June 2018, rounded to the nearest whole
dollar.
[[Page 60361]]
vi. For 2020, $1,099, reflecting a 2 percent increase in the
CPI-U from June 2018 to June 2019, rounded to the nearest whole
dollar.
vii. For 2021, $1,103, reflecting a 0.3 percent increase in the
CPI-U from June 2019 to June 2020, rounded to the nearest whole
dollar.
viii. For 2022, $1,148, reflecting a 4.2 percent increase in the
CPI-U from June 2020 to June 2021, rounded to the nearest whole
dollar.
2. Historical adjustment of $400 amount. Prior to January 10,
2014, a mortgage loan was covered by Sec. 1026.32 if the total
points and fees payable by the consumer at or before loan
consummation exceeded the greater of $400 or 8 percent of the total
loan amount. The $400 figure was adjusted annually on January 1 by
the annual percentage change in the CPI that was in effect on the
preceding June 1, as follows:
i. For 1996, $412, reflecting a 3 percent increase in the CPI-U
from June 1994 to June 1995, rounded to the nearest whole dollar.
ii. For 1997, $424, reflecting a 2.9 percent increase in the
CPI-U from June 1995 to June 1996, rounded to the nearest whole
dollar.
iii. For 1998, $435, reflecting a 2.5 percent increase in the
CPI-U from June 1996 to June 1997, rounded to the nearest whole
dollar.
iv. For 1999, $441, reflecting a 1.4 percent increase in the
CPI-U from June 1997 to June 1998, rounded to the nearest whole
dollar.
v. For 2000, $451, reflecting a 2.3 percent increase in the CPI-
U from June 1998 to June 1999, rounded to the nearest whole dollar.
vi. For 2001, $465, reflecting a 3.1 percent increase in the
CPI-U from June 1999 to June 2000, rounded to the nearest whole
dollar.
vii. For 2002, $480, reflecting a 3.27 percent increase in the
CPI-U from June 2000 to June 2001, rounded to the nearest whole
dollar.
viii. For 2003, $488, reflecting a 1.64 percent increase in the
CPI-U from June 2001 to June 2002, rounded to the nearest whole
dollar.
ix. For 2004, $499, reflecting a 2.22 percent increase in the
CPI-U from June 2002 to June 2003, rounded to the nearest whole
dollar.
x. For 2005, $510, reflecting a 2.29 percent increase in the
CPI-U from June 2003 to June 2004, rounded to the nearest whole
dollar.
xi. For 2006, $528, reflecting a 3.51 percent increase in the
CPI-U from June 2004 to June 2005, rounded to the nearest whole
dollar.
xii. For 2007, $547, reflecting a 3.55 percent increase in the
CPI-U from June 2005 to June 2006, rounded to the nearest whole
dollar.
xiii. For 2008, $561, reflecting a 2.56 percent increase in the
CPI-U from June 2006 to June 2007, rounded to the nearest whole
dollar.
xiv. For 2009, $583, reflecting a 3.94 percent increase in the
CPI-U from June 2007 to June 2008, rounded to the nearest whole
dollar.
xv. For 2010, $579, reflecting a 0.74 percent decrease in the
CPI-U from June 2008 to June 2009, rounded to the nearest whole
dollar.
xvi. For 2011, $592, reflecting a 2.2 percent increase in the
CPI-U from June 2009 to June 2010, rounded to the nearest whole
dollar.
xvii. For 2012, $611, reflecting a 3.2 percent increase in the
CPI-U from June 2010 to June 2011, rounded to the nearest whole
dollar.
xviii. For 2013, $625, reflecting a 2.3 percent increase in the
CPI-U from June 2011 to June 2012, rounded to the nearest whole
dollar.
xix. For 2014, $632, reflecting a 1.1 percent increase in the
CPI-U from June 2012 to June 2013, rounded to the nearest whole
dollar.
3. Applicable threshold. For purposes of Sec.
1026.32(a)(1)(ii), a creditor must determine the applicable points
and fees threshold based on the face amount of the note (or, in the
case of an open-end credit plan, the credit limit for the plan when
the account is opened). However, the creditor must apply the
allowable points and fees percentage to the ``total loan amount,''
as defined in Sec. 1026.32(b)(4). For closed-end credit
transactions, the total loan amount may be different than the face
amount of the note. The $20,000 amount in Sec. 1026.32(a)(1)(ii)(A)
and (B) is adjusted annually on January 1 by the annual percentage
change in the CPI that was in effect on the preceding June 1.
i. For 2015, $20,391, reflecting a 2 percent increase in the
CPI-U from June 2013 to June 2014, rounded to the nearest whole
dollar.
ii. For 2016, $20,350, reflecting a .2 percent decrease in the
CPI-U from June 2014 to June 2015, rounded to the nearest whole
dollar.
iii. For 2017, $20,579, reflecting a 1.1 percent increase in the
CPI-U from June 2015 to June 2016, rounded to the nearest whole
dollar.
iv. For 2018, $21,032, reflecting a 2.2 percent increase in the
CPI-U from June 2016 to June 2017, rounded to the nearest whole
dollar.
v. For 2019, $21,549, reflecting a 2.5 percent increase in the
CPI-U from June 2017 to June 2018, rounded to the nearest whole
dollar.
vi. For 2020, $21,980, reflecting a 2 percent increase in the
CPI-U from June 2018 to June 2019, rounded to the nearest whole
dollar.
vii. For 2021, $22,052 reflecting a 0.3 percent increase in the
CPI-U from June 2019 to June 2020, rounded to the nearest whole
dollar.
viii. For 2022, $22,969 reflecting a 4.2 percent increase in the
CPI-U from June 2020 to June 2021, rounded to the nearest whole
dollar.
* * * * *
Section 1026.43--Minimum Standards for Transactions Secured by a
Dwelling
* * * * *
Paragraph 43(e)(2)(vi).
1. Determining the average prime offer rate for a comparable
transaction as of the date the interest rate is set. For guidance on
determining the average prime offer rate for a comparable
transaction as of the date the interest rate is set, see comments
43(b)(4)-1 through -3.
2. Determination of applicable threshold. A creditor must
determine the applicable threshold by determining which category the
loan falls into based on the face amount of the note (the ``loan
amount'' as defined in Sec. 1026.43(b)(5)). For example, for a
first-lien covered transaction with a loan amount of $75,000, the
loan would fall into the tier for loans greater than or equal to
$66,156 (indexed for inflation) but less than $110,260 (indexed for
inflation), for which the applicable threshold is 3.5 or more
percentage points.
3. Annual adjustment for inflation. The dollar amounts in Sec.
1026.43(e)(2)(vi) will be adjusted annually on January 1 by the
annual percentage change in the CPI-U that was in effect on the
preceding June 1. The Bureau will publish adjustments after the June
figures become available each year.
i. For 2022, reflecting a 4.2 percent increase in the CPI-U that
was reported on the preceding June 1, to satisfy Sec.
1026.43(e)(2)(vi), the annual percentage rate may not exceed the
average prime offer rate for a comparable transaction as of the date
the interest rate is set by the following amounts:
A. For a first-lien covered transaction with a loan amount
greater than or equal to $114,847, 2.25 or more percentage points;
B. For a first-lien covered transaction with a loan amount
greater than or equal to $68,908 but less than $114,847, 3.5 or more
percentage points;
C. For a first-lien covered transaction with a loan amount less
than $68,908, 6.5 or more percentage points;
D. For a first-lien covered transaction secured by a
manufactured home with a loan amount less than $114,847, 6.5 or more
percentage points;
E. For a subordinate-lien covered transaction with a loan amount
greater than or equal to $68,908, 3.5 or more percentage points;
F. For a subordinate-lien covered transaction with a loan amount
less than $68,908, 6.5 or more percentage points.
4. Determining the annual percentage rate for certain loans for
which the interest rate may or will change.
i. In general. The commentary to Sec. 1026.17(c)(1) and other
provisions in subpart C of this part address how to determine the
annual percentage rate disclosures for closed-end credit
transactions. Provisions in Sec. 1026.32(a)(3) address how to
determine the annual percentage rate to determine coverage under
Sec. 1026.32(a)(1)(i). Section 1026.43(e)(2)(vi) requires, for the
purposes of Sec. 1026.43(e)(2)(vi), a different determination of
the annual percentage rate for a qualified mortgage under Sec.
1026.43(e)(2) for which the interest rate may or will change within
the first five years after the date on which the first regular
periodic payment will be due. An identical special rule for
determining the annual percentage rate for such a loan also applies
for purposes of Sec. 1026.43(b)(4).
ii. Loans for which the interest rate may or will change.
Section 1026.43(e)(2)(vi) includes a special rule for determining
the annual percentage rate for a loan for which the interest rate
may or will change within the first five years after the date on
which the first regular periodic payment will be due. This rule
applies to adjustable-rate mortgages that have a fixed-rate period
of five years or less and to step-rate mortgages for which the
interest rate changes within that five-year period.
iii. Maximum interest rate during the first five years. For a
loan for which the interest rate may or will change within the first
five
[[Page 60362]]
years after the date on which the first regular periodic payment
will be due, a creditor must treat the maximum interest rate that
could apply at any time during that five-year period as the interest
rate for the full term of the loan to determine the annual
percentage rate for purposes of Sec. 1026.43(e)(2)(vi), regardless
of whether the maximum interest rate is reached at the first or
subsequent adjustment during the five-year period. For additional
instruction on how to determine the maximum interest rate during the
first five years after the date on which the first regular periodic
payment will be due, see comments 43(e)(2)(iv)-3 and -4.
iv. Treatment of the maximum interest rate in determining the
annual percentage rate. For a loan for which the interest rate may
or will change within the first five years after the date on which
the first regular periodic payment will be due, the creditor must
determine the annual percentage rate for purposes of Sec.
1026.43(e)(2)(vi) by treating the maximum interest rate that may
apply within the first five years as the interest rate for the full
term of the loan. For example, assume an adjustable-rate mortgage
with a loan term of 30 years and an initial discounted rate of 5.0
percent that is fixed for the first three years. Assume that the
maximum interest rate during the first five years after the date on
which the first regular periodic payment will be due is 7.0 percent.
Pursuant to Sec. 1026.43(e)(2)(vi), the creditor must determine the
annual percentage rate based on an interest rate of 7.0 percent
applied for the full 30-year loan term.
5. Meaning of a manufactured home. For purposes of Sec.
1026.43(e)(2)(vi)(D), manufactured home means any residential
structure as defined under regulations of the U.S. Department of
Housing and Urban Development (HUD) establishing manufactured home
construction and safety standards (24 CFR 3280.2). Modular or other
factory-built homes that do not meet the HUD code standards are not
manufactured homes for purposes of Sec. 1026.43(e)(2)(vi)(D).
6. Scope of threshold for transactions secured by a manufactured
home. The threshold in Sec. 1026.43(e)(2)(vi)(D) applies to first-
lien covered transactions less than $110,260 (indexed for inflation)
that are secured by a manufactured home and land, or by a
manufactured home only.
* * * * *
Paragraph 43(e)(3)(ii).
1. Annual adjustment for inflation. The dollar amounts,
including the loan amounts, in Sec. 1026.43(e)(3)(i) will be
adjusted annually on January 1 by the annual percentage change in
the CPI-U that was in effect on the preceding June 1. The Bureau
will publish adjustments after the June figures become available
each year.
i. For 2015, reflecting a 2 percent increase in the CPI-U that
was reported on the preceding June 1, a covered transaction is not a
qualified mortgage unless the transactions total points and fees do
not exceed;
A. For a loan amount greater than or equal to $101,953: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $61,172 but less
than $101,953: $3,059;
C. For a loan amount greater than or equal to $20,391 but less
than $61,172: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $12,744 but less
than $20,391; $1,020;
E. For a loan amount less than $12,744: 8 percent of the total
loan amount.
ii. For 2016, reflecting a 0.2 percent decrease in the CPI-U
that was reported on the preceding June 1, a covered transaction is
not a qualified mortgage unless the transactions total points and
fees do not exceed;
A. For a loan amount greater than or equal to $101,749: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $61,050 but less
than $101,749: $3,052;
C. For a loan amount greater than or equal to $20,350 but less
than $61,050: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $12,719 but less
than $20,350; $1,017;
E. For a loan amount less than $12,719: 8 percent of the total
loan amount.
iii. For 2017, reflecting a 1.1 percent increase in the CPI-U
that was reported on the preceding June 1, a covered transaction is
not a qualified mortgage unless the transactions total points and
fees do not exceed:
A. For a loan amount greater than or equal to $102,894: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $61,737 but less
than $102,894: $3,087;
C. For a loan amount greater than or equal to $20,579 but less
than $61,737: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $12,862 but less
than $20,579: $1,029;
E. For a loan amount less than $12,862: 8 percent of the total
loan amount.
iv. For 2018, reflecting a 2.2 percent increase in the CPI-U
that was reported on the preceding June 1, a covered transaction is
not a qualified mortgage unless the transaction's total points and
fees do not exceed:
A. For a loan amount greater than or equal to $105,158: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $63,095 but less
than $105,158: $3,155;
C. For a loan amount greater than or equal to $21,032 but less
than $63,095: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $13,145 but less
than $21,032: $1,052;
E. For a loan amount less than $13,145: 8 percent of the total
loan amount.
v. For 2019, reflecting a 2.5 percent increase in the CPI-U that
was reported on the preceding June 1, a covered transaction is not a
qualified mortgage unless the transaction's total points and fees do
not exceed:
A. For a loan amount greater than or equal to $107,747: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $64,648 but less
than $107,747: $3,232;
C. For a loan amount greater than or equal to $21,549 but less
than $64,648: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $13,468 but less
than $21,549: $1,077;
E. For a loan amount less than $13,468: 8 percent of the total
loan amount.
vi. For 2020, reflecting a 2 percent increase in the CPI-U that
was reported on the preceding June 1, a covered transaction is not a
qualified mortgage unless the transaction's total points and fees do
not exceed:
A. For a loan amount greater than or equal to $109,898: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $65,939 but less
than $109,898: $3,297;
C. For a loan amount greater than or equal to $21,980 but less
than $65,939: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $13,737 but less
than $21,980: $1,099;
E. For a loan amount less than $13,737: 8 percent of the total
loan amount.
vii. For 2021, reflecting a 0.3 percent increase in the CPI-U
that was reported on the preceding June 1, a covered transaction is
not a qualified mortgage unless the transaction's total points and
fees do not exceed:
A. For a loan amount greater than or equal to $110,260: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $66,156 but less
than $110,260: $3,308;
C. For a loan amount greater than or equal to $22,052 but less
than $66,156: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $13,783 but less
than $22,052: $1,103;
E. For a loan amount less than $13,783: 8 percent of the total
loan amount.
viii. For 2022, reflecting a 4.2 percent increase in the CPI-U
that was reported on the preceding June 1, a covered transaction is
not a qualified mortgage unless the transaction's total points and
fees do not exceed:
A. For a loan amount greater than or equal to $114,847: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $68,908 but less
than $114,847: $3,445;
C. For a loan amount greater than or equal to $22,969 but less
than $68,908: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $14,356 but less
than $22,969: $1,148;
E. For a loan amount less than $14,356: 8 percent of the total
loan amount.
* * * * *
Section 1026.52--Limitations on Fees
* * * * *
52(b)(1)(ii) Safe Harbors
1. Multiple violations of same type. i. Same billing cycle or
next six billing cycles. A card issuer cannot impose a fee for a
violation pursuant to Sec. 1026.52(b)(1)(ii)(B) unless a fee has
previously been imposed for the same type of violation pursuant to
Sec. 1026.52(b)(1)(ii)(A). Once a fee has been imposed for a
violation pursuant to Sec. 1026.52(b)(1)(ii)(A), the card issuer
may impose a fee pursuant to Sec. 1026.52(b)(1)(ii)(B) for any
subsequent violation of the same type until that type of violation
has not occurred for a period of six consecutive complete billing
cycles. A fee has been imposed for purposes of Sec.
1026.52(b)(1)(ii) even if the
[[Page 60363]]
card issuer waives or rebates all or part of the fee.
A. Late payments. For purposes of Sec. 1026.52(b)(1)(ii), a
late payment occurs during the billing cycle in which the payment
may first be treated as late consistent with the requirements of
this part and the terms or other requirements of the account.
B. Returned payments. For purposes of Sec. 1026.52(b)(1)(ii), a
returned payment occurs during the billing cycle in which the
payment is returned to the card issuer.
C. Transactions that exceed the credit limit. For purposes of
Sec. 1026.52(b)(1)(ii), a transaction that exceeds the credit limit
for an account occurs during the billing cycle in which the
transaction occurs or is authorized by the card issuer.
D. Declined access checks. For purposes of Sec.
1026.52(b)(1)(ii), a check that accesses a credit card account is
declined during the billing cycle in which the card issuer declines
payment on the check.
ii. Relationship to Sec. Sec. 1026.52(b)(2)(ii) and
1026.56(j)(1). If multiple violations are based on the same event or
transaction such that Sec. 1026.52(b)(2)(ii) prohibits the card
issuer from imposing more than one fee, the event or transaction
constitutes a single violation for purposes of Sec.
1026.52(b)(1)(ii). Furthermore, consistent with Sec.
1026.56(j)(1)(i), no more than one violation for exceeding an
account's credit limit can occur during a single billing cycle for
purposes of Sec. 1026.52(b)(1)(ii). However, Sec.
1026.52(b)(2)(ii) does not prohibit a card issuer from imposing fees
for exceeding the credit limit in consecutive billing cycles based
on the same over-the-limit transaction to the extent permitted by
Sec. 1026.56(j)(1). In these circumstances, the second and third
over-the-limit fees permitted by Sec. 1026.56(j)(1) may be imposed
pursuant to Sec. 1026.52(b)(1)(ii)(B). See comment 52(b)(2)(ii)-1.
iii. Examples. The following examples illustrate the application
of Sec. 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) with respect to
credit card accounts under an open-end (not home-secured) consumer
credit plan that are not charge card accounts. For purposes of these
examples, assume that the billing cycles for the account begin on
the first day of the month and end on the last day of the month and
that the payment due date for the account is the twenty-fifth day of
the month.
A. Violations of same type (late payments). A required minimum
periodic payment of $50 is due on March 25. On March 26, a late
payment has occurred because no payment has been received.
Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(A), the card
issuer imposes a $25 late payment fee on March 26. In order for the
card issuer to impose a $35 late payment fee pursuant to Sec.
1026.52(b)(1)(ii)(B), a second late payment must occur during the
April, May, June, July, August, or September billing cycles.
1. The card issuer does not receive any payment during the March
billing cycle. A required minimum periodic payment of $100 is due on
April 25. On April 20, the card issuer receives a $50 payment. No
further payment is received during the April billing cycle.
Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(B), the card
issuer may impose a $35 late payment fee on April 26. Furthermore,
the card issuer may impose a $35 late payment fee for any late
payment that occurs during the May, June, July, August, September,
or October billing cycles.
2. Same facts as in paragraph A above. On March 30, the card
issuer receives a $50 payment and the required minimum periodic
payments for the April, May, June, July, August, and September
billing cycles are received on or before the payment due date. A
required minimum periodic payment of $60 is due on October 25. On
October 26, a late payment has occurred because the required minimum
periodic payment due on October 25 has not been received. However,
because this late payment did not occur during the six billing
cycles following the March billing cycle, Sec. 1026.52(b)(1)(ii)
only permits the card issuer to impose a late payment fee of $25.
B. Violations of different types (late payment and over the
credit limit). The credit limit for an account is $1,000. Consistent
with Sec. 1026.56, the consumer has affirmatively consented to the
payment of transactions that exceed the credit limit. A required
minimum periodic payment of $30 is due on August 25. On August 26, a
late payment has occurred because no payment has been received.
Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(A), the card
issuer imposes a $25 late payment fee on August 26. On August 30,
the card issuer receives a $30 payment. On September 10, a
transaction causes the account balance to increase to $1,150, which
exceeds the account's $1,000 credit limit. On September 11, a second
transaction increases the account balance to $1,350. On September
23, the card issuer receives the $50 required minimum periodic
payment due on September 25, which reduces the account balance to
$1,300. On September 30, the card issuer imposes a $25 over-the-
limit fee, consistent with Sec. 1026.52(b)(1)(ii)(A). On October
26, a late payment has occurred because the $60 required minimum
periodic payment due on October 25 has not been received.
Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(B), the card
issuer imposes a $35 late payment fee on October 26.
C. Violations of different types (late payment and returned
payment). A required minimum periodic payment of $50 is due on July
25. On July 26, a late payment has occurred because no payment has
been received. Accordingly, consistent with Sec.
1026.52(b)(1)(ii)(A), the card issuer imposes a $25 late payment fee
on July 26. On July 30, the card issuer receives a $50 payment. A
required minimum periodic payment of $50 is due on August 25. On
August 24, a $50 payment is received. On August 27, the $50 payment
is returned to the card issuer for insufficient funds. In these
circumstances, Sec. 1026.52(b)(2)(ii) permits the card issuer to
impose either a late payment fee or a returned payment fee but not
both because the late payment and the returned payment result from
the same event or transaction. Accordingly, for purposes of Sec.
1026.52(b)(1)(ii), the event or transaction constitutes a single
violation. However, if the card issuer imposes a late payment fee,
Sec. 1026.52(b)(1)(ii)(B) permits the issuer to impose a fee of $35
because the late payment occurred during the six billing cycles
following the July billing cycle. In contrast, if the card issuer
imposes a returned payment fee, the amount of the fee may be no more
than $25 pursuant to Sec. 1026.52(b)(1)(ii)(A).
2. Adjustments based on Consumer Price Index. For purposes of
Sec. 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B), the Bureau shall
calculate each year price level adjusted amounts using the Consumer
Price Index in effect on June 1 of that year. When the cumulative
change in the adjusted minimum value derived from applying the
annual Consumer Price level to the current amounts in Sec.
1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) has risen by a whole dollar,
those amounts will be increased by $1.00. Similarly, when the
cumulative change in the adjusted minimum value derived from
applying the annual Consumer Price level to the current amounts in
Sec. 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) has decreased by a
whole dollar, those amounts will be decreased by $1.00. The Bureau
will publish adjustments to the amounts in Sec.
1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B).
i. Historical thresholds.
A. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $25 under Sec.
1026.52(b)(1)(ii)(A) and $35 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2013.
B. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $26 under Sec.
1026.52(b)(1)(ii)(A) and $37 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2014.
C. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $27 under Sec.
1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2015.
D. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $27 under Sec.
1026.52(b)(1)(ii)(A), through December 31, 2016. Card issuers were
permitted to impose a fee for violating the terms of an agreement if
the fee did not exceed $37 under Sec. 1026.52(b)(1)(ii)(B), through
June 26, 2016, and $38 under Sec. 1026.52(b)(1)(ii)(B) from June
27, 2016 through December 31, 2016.
E. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $27 under Sec.
1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2017.
F. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $27 under Sec.
1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2018.
G. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $28 under Sec.
1026.52(b)(1)(ii)(A) and $39 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2019.
H. Card issuers were permitted to impose a fee for violating the
terms of an agreement
[[Page 60364]]
if the fee did not exceed $29 under Sec. 1026.52(b)(1)(ii)(A) and
$40 under Sec. 1026.52(b)(1)(ii)(B), through December 31, 2020.
I. Card issuers were permitted to impose a fee for violating the
terms of an agreement if the fee did not exceed $29 under Sec.
1026.52(b)(1)(ii)(A) and $40 under Sec. 1026.52(b)(1)(ii)(B),
through December 31, 2021.
3. Delinquent balance for charge card accounts. Section
1026.52(b)(1)(ii)(C) provides that, when a charge card issuer that
requires payment of outstanding balances in full at the end of each
billing cycle has not received the required payment for two or more
consecutive billing cycles, the card issuer may impose a late
payment fee that does not exceed three percent of the delinquent
balance. For purposes of Sec. 1026.52(b)(1)(ii)(C), the delinquent
balance is any previously billed amount that remains unpaid at the
time the late payment fee is imposed pursuant to Sec.
1026.52(b)(1)(ii)(C). Consistent with Sec. 1026.52(b)(2)(ii), a
charge card issuer that imposes a fee pursuant to Sec.
1026.52(b)(1)(ii)(C) with respect to a late payment may not impose a
fee pursuant to Sec. 1026.52(b)(1)(ii)(B) with respect to the same
late payment. The following examples illustrate the application of
Sec. 1026.52(b)(1)(ii)(C):
i. Assume that a charge card issuer requires payment of
outstanding balances in full at the end of each billing cycle and
that the billing cycles for the account begin on the first day of
the month and end on the last day of the month. At the end of the
June billing cycle, the account has a balance of $1,000. On July 5,
the card issuer provides a periodic statement disclosing the $1,000
balance consistent with Sec. 1026.7. During the July billing cycle,
the account is used for $300 in transactions, increasing the balance
to $1,300. At the end of the July billing cycle, no payment has been
received and the card issuer imposes a $25 late payment fee
consistent with Sec. 1026.52(b)(1)(ii)(A). On August 5, the card
issuer provides a periodic statement disclosing the $1,325 balance
consistent with Sec. 1026.7. During the August billing cycle, the
account is used for $200 in transactions, increasing the balance to
$1,525. At the end of the August billing cycle, no payment has been
received. Consistent with Sec. 1026.52(b)(1)(ii)(C), the card
issuer may impose a late payment fee of $40, which is 3% of the
$1,325 balance that was due at the end of the August billing cycle.
Section 1026.52(b)(1)(ii)(C) does not permit the card issuer to
include the $200 in transactions that occurred during the August
billing cycle.
ii. Same facts as above except that, on August 25, a $100
payment is received. Consistent with Sec. 1026.52(b)(1)(ii)(C), the
card issuer may impose a late payment fee of $37, which is 3% of the
unpaid portion of the $1,325 balance that was due at the end of the
August billing cycle ($1,225).
iii. Same facts as in paragraph A above except that, on August
25, a $200 payment is received. Consistent with Sec.
1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee
of $34, which is 3% of the unpaid portion of the $1,325 balance that
was due at the end of the August billing cycle ($1,125). In the
alternative, the card issuer may impose a late payment fee of $35
consistent with Sec. 1026.52(b)(1)(ii)(B). However, Sec.
1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees.
* * * * *
Dated: October 25, 2021.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2021-23478 Filed 11-1-21; 8:45 am]
BILLING CODE 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.