2016 threshold and fee adjustments
COMPLIANCE NEWS |
The annual adjustment to these fees and thresholds is based on an annual June 1 version of the Consumer Price index. Because the Consumer Price Index decreased during the last period, the fees and thresholds have decreased or remained the same. The following fee and threshold changes have been made for 2016:
- HOEPA fee adjustment:The Consumer Financial Protection Bureau (Bureau) published its annual adjustment to the amount of fees that trigger additional disclosure requirements under the Truth in Lending Act and the Home Ownership and Equity Protection Act of 1994 (HOEPA). HOEPA restricts credit terms and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger or certain percentage of the total loan amount, whichever is larger. The total loan amount threshold has been adjusted to $20,350. The dollar amount of the fee-based trigger has been adjusted to $1,017, effective Jan. 1, 2016, based on the annual percentage change reflected in the Consumer Price Index for All Urban Consumers (CPI-U) that was in effect as of June 1, 2015. More information available via The Federal Register notice.
- ATR/QM total points and fees adjustment: On Jan. 10, 2013, the Dodd-Frank Act amended Regulation Z to require mortgage lenders to consider a consumer's ability to repay home loans before extending them credit. The 2013 ability-to-repay/qualified mortgage (ATR/QM) final rule established the points and fees limits that a loan must not exceed in order to satisfy the requirements for a qualified mortgage. These limits and amounts are recalculated annually for inflation using the CPI-U index in effect on June 1, 2015. Effective Jan. 1, 2016, for the purpose of determining a consumer's ability to repay a transaction secured by a dwelling, a covered transaction is not a QM unless the transaction's total points and fees do not exceed:
- 3 percent of the total loan amount for a loan amount greater than or equal to $101,749
- $3,052 for a loan amount greater than or equal to $61,050, but less than $101,749
- 5 percent of the total loan amount for a loan greater than or equal to $20,350, but less than $61,050
- $1,017 for a loan amount greater than or equal to $12,719, but less than $20,350
- 8 percent of the total loan amount for a loan less than $12,719
For the list of adjustments for each year, see the Commentary to Regulation Z at 1026.43(e)(3)(ii)-1. More information available via The Federal Register notice.
- CARD Act thresholds:Regulation Z requires account opening disclosures to include any fixed finance charge and a brief description of the charge. In addition, any minimum interest charge exceeding $1 that could be imposed during a billing cycle, and a brief description of the charge should also be disclosed. The $1 threshold amount will be adjusted periodically by the Bureau to reflect changes in the Consumer Price Index. The minimum interest charge threshold did not increase for 2016 and remains at $1. The limitations on penalty fees thresholds, as noted in Regulation Z, 1026.52(b)(1)(ii)(A) and (B), have been modified as indicated below for 2016. A card issuer may impose a fee for violating the terms or other requirements of an account if the dollar amount of the fee does not exceed a certain threshold. This threshold did not change and remains at $27 [1026.52(b)(1)(ii)A)]. If the issuer previously imposed such a fee, the fee threshold is different, and has decreased from $38 to $37 [1026.52(b)(1)(ii)(B)]. More information available via The Federal Register notice.