United States

CFPB revises Regulation Z thresholds

COMPLIANCE NEWS  | 

Annual adjustments to the Regulation Z dollar thresholds have been issued by the Consumer Financial Protection Bureau (CFPB).  Released on Aug. 15, 2014, the final rule establishes an effective date of Jan. 1, 2015, for the new thresholds, which pertain to several Regulation Z rules governed by the Truth in Lending Act and as amended by Credit Card Accountability Responsibility and Disclosure Act of 2009, the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The purpose of the adjustments is to bring the thresholds more in line with the Consumer Price Index (CPI). Regulation Z provides that the minimum interest charge thresholds will be recalculated annually using the CPI for Urban Wage Earners and Clerical Workers that was in effect on the preceding June 1.

Therefore, based on the CPI in effect on June 1, 2014, the revised thresholds will be as follows:

  • The minimum interest charge disclosure thresholds will remain unchanged.
  • For credit cards, the adjusted amount for the penalty fees safe harbor is $27 for a first late payment and $38 for subsequent violations.
  • For HOEPA loans, the adjusted total loan amount threshold is $20,391.
  • The adjusted statutory fee trigger for HOPEA loans is $1,020.
  • For the purpose of determining a consumer's ability-to-repay a transaction secured by a dwelling, a covered transaction is not a qualified mortgage unless the transaction's total points and fees do not exceed 3 percent of the total loan amount for a loan greater than or equal to $101,953;
    • $3,059 for a loan amount greater than or equal to $61,172, but less than $101,953
    • 5 percent of the total loan amount for a loan greater than or equal to $20,391, but less than $61,172
    • $1,020 for a loan amount greater than or equal to $12,744, but less than $20,391
    • 8 percent of the total loan amount for a loan amount less than $12,744

For further information, read about the final rule governing the revised thresholds.