Rule2022-28023
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
December 23, 2022
Effective
January 1, 2023
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (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 calculates the dollar amounts for several provisions in Regulation Z annually; this final rule revises, as applicable, the dollar amounts for provisions implementing TILA and amendments to TILA, including under 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, 2022.
Full Text
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<title>Federal Register, Volume 87 Issue 246 (Friday, December 23, 2022)</title>
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[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Rules and Regulations]
[Pages 78831-78837]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28023]
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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 Consumer Financial Protection Bureau (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 calculates the dollar amounts for several
provisions in Regulation Z annually; this final rule revises, as
applicable, the dollar amounts for provisions implementing TILA and
amendments to TILA, including under 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, 2022.
DATES: This final rule is effective January 1, 2023.
FOR FURTHER INFORMATION CONTACT: Thomas Dowell, 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#ce8d889e8c918fadadabbdbda7aca7a2a7bab78eada8beace0a9a1b8"><span class="__cf_email__" data-cfemail="52111402100d1331313721213b303b3e3b262b12313422307c353d24">[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 it must adjust
annually to reflect 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 2023. For HOEPA loans, the adjusted total loan amount
threshold for high-cost mortgages in 2023 will be $24,866. The adjusted
points-and-fees dollar trigger for high-cost mortgages in 2023 will be
$1,243. 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 2023 will be: 2.25 or more percentage points for a
first-lien covered transaction with
[[Page 78832]]
a loan amount greater than or equal to $124,331; 3.5 or more percentage
points for a first-lien covered transaction with a loan amount greater
than or equal to $74,599 but less than $124,331; 6.5 or more percentage
points for a first-lien covered transaction with a loan amount less
than $74,599; 6.5 or more percentage points for a first-lien covered
transaction secured by a manufactured home with a loan amount less than
$124,331; 3.5 or more percentage points for a subordinate-lien covered
transaction with a loan amount greater than or equal to $74,599; or 6.5
or more percentage points for a subordinate-lien covered transaction
with a loan amount less than $74,599. For all categories of QMs, the
thresholds for total points and fees in 2023 will be 3 percent of the
total loan amount for a loan greater than or equal to $124,331; $3,730
for a loan amount greater than or equal to $74,599 but less than
$124,331; 5 percent of the total loan amount for a loan greater than or
equal to $24,866 but less than $74,599; $1,243 for a loan amount
greater than or equal to $15,541 but less than $24,866; and 8 percent
of the total loan amount for a loan amount less than $15,541.\1\
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\1\ The QM categories in Regulation Z appear at 12 CFR
1026.43(e)(2), (e)(4), (e)(5), (e)(6), and (e)(7). Note that 12 CFR
1026.43(e)(6) applies only to covered transactions for which the
application was received before April 1, 2016.
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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 Bureau shall calculate the minimum interest charge
thresholds 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 Bureau will increase the
minimum interest charge amounts set forth in the regulation by $1.00.
The Bureau bases its 2023 adjustment analysis on the CPI-W index in
effect on June 1, 2022, as reported by BLS on May 11, 2022.\3\ As a
result, the adjustment reflects the percentage change in the CPI-W from
April 2021 to April 2022. The adjustment analysis accounts for an 8.9
percent increase in the CPI-W from April 2021 to April 2022. 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,
therefore, is 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 11,
2022, was the most current as of June 1, 2022.
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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,\4\ 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 the Bureau
recalculate this threshold amount annually using the CPI index in
effect on the preceding June 1; the Bureau uses the CPI-U for this
adjustment.\5\ The Bureau bases the 2023 adjustment on the CPI-U index
in effect on June 1, 2022, as reported by BLS on May 11, 2022. As a
result, the adjustment reflects the percentage change in the CPI-U from
April 2021 to April 2022, which is an increase of 8.3 percent. The
adjustment to $24,866 here reflects the 8.3 percent increase in the
CPI-U index from April 2021 to April 2022 rounded to the nearest whole
dollar amount for ease of compliance.
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\4\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub. L. 111-203, 124 Stat. 1376 (2010).
\5\ 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 the lesser of 8 percent of the total loan amount or
$1,000. Section 1026.32(a)(1)(ii)(B) provides that the Bureau will
recalculate the dollar amount threshold annually using the CPI index in
effect on the preceding June 1; the Bureau uses the CPI-U for this
adjustment. The Bureau bases the 2023 adjustment on the CPI-U index in
effect on June 1, 2022, as reported by BLS on May 11, 2022. As a
result, the adjustment reflects the percentage change in CPI-U from
April 2021 to April 2022, which is an increase of 8.3 percent. The
adjustment to $1,243 here reflects the 8.3 percent increase in the CPI-
U index from April 2021 to April 2022 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).\6\ 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 must 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 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
[[Page 78833]]
percentage points for a subordinate-lien covered transaction with a
loan amount less than $66,156 (indexed for inflation).\7\ The rule
states that the Bureau will adjust the loan amounts in Sec.
1026.43(e)(2)(vi) annually on January 1 by the annual percentage change
in the CPI-U that was in effect on the preceding June 1.\8\
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\6\ 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).
\7\ The loan amounts in the regulatory text reflect the CPI-U in
effect on June 1, 2020.
\8\ 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 (indexed for inflation); $3,000 (indexed for
inflation) for a loan amount greater than or equal to $60,000 (indexed
for inflation) but less than $100,000 (indexed for inflation); 5
percent of the total loan amount for loans greater than or equal to
$20,000 (indexed for inflation) but less than $60,000 (indexed for
inflation); $1,000 (indexed for inflation) for a loan amount greater
than or equal to $12,500 (indexed for inflation) but less than $20,000
(indexed for inflation); or 8 percent of the total loan amount for
loans less than $12,500 (indexed for inflation). Section
1026.43(e)(3)(ii) provides that the Bureau will recalculate the limits
and loan amounts in Sec. 1026.43(e)(3)(i) annually for inflation using
the CPI-U index in effect on the preceding June 1.
The Bureau bases the 2023 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 on the CPI-U index in
effect on June 1, 2022, as reported by BLS on May 11, 2022. As a
result, the adjustment reflects the percentage change in CPI-U from
April 2021 to April 2022, which is an increase of 8.3 percent. The 2023
adjustment \9\ adopted here reflects an 8.3 percent increase in the
CPI-U index for this period rounded to whole dollars for ease of
compliance.
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\9\ For 2023, 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 $124,331; 3.5 or more percentage points for a first-lien
covered transaction with a loan amount greater than or equal to
$74,599 but less than $124,331; 6.5 or more percentage points for a
first-lien covered transaction with a loan amount less than $74,599;
6.5 or more percentage points for a first-lien covered transaction
secured by a manufactured home with a loan amount less than
$124,331; 3.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount greater than or equal to
$74,599; or 6.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount less than $74,599.
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
$124,331; $3,730 for a loan amount greater than or equal to $74,599
but less than $124,331; 5 percent of the total loan amount for loans
greater than or equal to $24,866 but less than $74,599; $1,243 for a
loan amount greater than or equal to $15,541 but less than $24,866;
or 8 percent of the total loan amount for loans less than $15,541.
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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 2023. Accordingly, the Bureau is not amending these sections
of Regulation Z.
B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3
Effective January 1, 2023, 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 figure
is $24,866, and the adjusted points-and-fees dollar trigger under Sec.
1026.32(a)(1)(ii)(B) is $1,243. If the total loan amount for a
transaction is $24,866 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
$24,866, and the points-and-fees amount exceeds the lesser of the
adjusted points-and-fees dollar trigger of $1,243 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 2023 the new points-and-fees dollar
trigger and the new loan amount dollar threshold, respectively.
C. Qualified Mortgages Annual Threshold Adjustments
Effective January 1, 2023, to satisfy Sec. 1026.43(e)(2)(vi) under
the General QM loan definition, 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: 2.25 or
more percentage points for a first-lien covered transaction with a loan
amount greater than or equal to $124,331; 3.5 or more percentage points
for a first-lien covered transaction with a loan amount greater than or
equal to $74,599 but less than $124,331; 6.5 or more percentage points
for a first-lien covered transaction with a loan amount less than
$74,599; 6.5 or more percentage points for a first-lien covered
transaction secured by a manufactured home with a loan amount less than
$124,331; 3.5 or more percentage points for a subordinate-lien covered
transaction with a loan amount greater than or equal to $74,599; or 6.5
or more percentage points for a subordinate-lien covered transaction
with a loan amount less than $74,599. 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, 2023, 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 $124,331; $3,730 for a loan amount
greater than or equal to $74,599 but less than $124,331; 5 percent of
the total loan amount for loans greater than or equal to $24,866 but
less than $74,599; $1,243 for a loan amount greater than or equal to
$15,541 but less than $24,866; or 8 percent of the total loan amount
for loans less than $15,541. The Bureau is amending comment
43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect
the new dollar threshold amounts for 2023.
III. Procedural Requirements
A. Administrative Procedure Act
The Administrative Procedure Act does not require notice and
opportunity for public comment if an agency finds that notice and
public comment are impracticable, unnecessary, or contrary to the
public interest.\10\ Pursuant to this final rule, the Bureau adds
comments 32(a)(1)(ii)-1.ix, 32(a)(1)(ii)-3.ix, 43(e)(2)(vi)-3.ii, and
43(e)(3)(ii)-1.ix 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. 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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\10\ 5 U.S.C. 553(b)(B).
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[[Page 78834]]
For the same reasons, the Bureau finds that there is good cause to
make this rule effective on January 1, 2023. Section 553(d) of the APA
generally requires publication of a final rule not less than 30 days
before its effective date, except (1) a substantive rule which grants
or recognizes an exemption or relieves a restriction; (2) interpretive
rules and statements of policy; or (3) as otherwise provided by the
agency for good cause found and published with the rule. 5 U.S.C.
553(d). At a minimum, the Bureau believes the amendments made by this
rule fall under the third exception to section 553(d). As already
stated above, 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.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\11\ As
noted previously, the Bureau has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this final rule.
Accordingly, the RFA's requirement relating to an initial and final
regulatory flexibility analysis do not apply.
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\11\ 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,\12\ the
Bureau reviewed this final rule. The Bureau has determined that this
final rule does not create any new information collections or
substantially revise any existing collections.
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\12\ 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
Senior Advisor Brian Shearer, having reviewed and approved this
document, is delegating the authority to sign this document
electronically 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.
0
2. In Supplement I to Part 1026:
0
a. Under Section 1026.32--Requirements for High-Cost Mortgages, revise
Paragraph 32(a)(1)(ii); and
0
b. Under Section 1026.43--Minimum Standards for Transactions Secured by
a Dwelling, revise Paragraphs 43(e)(2)(vi) and 43(e)(3)(ii).
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.
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.
ix. For 2023, $1,243, reflecting an 8.3 percent increase in the
CPI-U from June 2021 to June 2022, 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
[[Page 78835]]
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.
ix. For 2023, $24,866 reflecting an 8.3 percent increase in the
CPI-U from June 2021 to June 2022, 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.
ii. For 2023, reflecting an 8.3 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 $124,331, 2.25 or more percentage points;
B. For a first-lien covered transaction with a loan amount greater
than or equal to $74,599 but less than $124,331, 3.5 or more percentage
points;
C. For a first-lien covered transaction with a loan amount less
than $74,599, 6.5 or more percentage points;
D. For a first-lien covered transaction secured by a manufactured
home with a loan amount less than $124,331, 6.5 or more percentage
points;
E. For a subordinate-lien covered transaction with a loan amount
greater than or equal to $74,599, 3.5 or more percentage points;
F. For a subordinate-lien covered transaction with a loan amount
less than $74,599, 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 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
[[Page 78836]]
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
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.
[[Page 78837]]
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.
ix. For 2023, reflecting an 8.3 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 $124,331: 3 percent
of the total loan amount;
B. For a loan amount greater than or equal to $74,599 but less than
$124,331: $3,730;
C. For a loan amount greater than or equal to $24,866 but less than
$74,599: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $15,541 but less than
$24,866: $1,243;
E. For a loan amount less than $15,541: 8 percent of the total loan
amount.
* * * * *
Laura Galban,
Federal Register Liaison, Consumer Financial Protection Bureau.
[FR Doc. 2022-28023 Filed 12-22-22; 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.