CFPB Calculates 2015 Changes to HOEPA, QM Loan Thresholds

By: Jann Swanson •

The Consumer Financial Protection Bureau (CFPB) has increased threshold amounts for loans governed by various trigger limits under Qualified Mortgages (QM) and Ability-to-Repay (ATR) Rules.   Under Regulation Z of the Truth in Lending Act CFPB is required to look at loan amounts subject to point and fee limits, adjusting them if necessary, on an annual basis.  The following changes will go into effect on January 1, 2015.

  • The limit for loans where points and fees may not exceed 3 percent of the total loan amount will increase from $100,000 to $101,953.
  • For a loan amount greater than or equal to $61,172 but less than $101,953 points and fees may not exceed $3,059. Under current rules points and fees may not exceed $3,000 for loan amounts between $60,000 and $100,000.
  • The threshold for fees not to exceed 5 percent of the total loan amount will increase to greater than or equal to $20,391 but less than $61,172 from $20,000 and $60,000 respectively.
  • For a loan amount greater than or equal to $12,744 (currently $12,500) but less than $20,391 (currently $20,000), points and fees may not exceed $1,020, an increase from $1,000.
  • For a loan amount less than $12,744 points and fees may not exceed 8 percent of the total loan amount.  Under the old rule the amount was $12,500.

TILA also requires CFPB to calculate annual adjustments to loan amounts affected by provisions of the CARD Act and HOEPA.  The Bureau has adjusted the loan amount threshold under HOEPA that determines whether a transaction is a high cost mortgage when the points and fees are either 5 percent or 8 percent of such amount from, respectively, $20,000 to $20,391, and $1,000 to $1,020.  

Required CARD Act adjustments are to (1) the minimum interest charge threshold that triggers disclosure of the minimum interest charge in credit card applications, solicitations and account opening disclosures, and (2) the fee thresholds for the penalty fees safe harbor.  The calculation did not result in a change to the current $1.00 minimum interest charge threshold but CFPB increased the current penalty fee safe harbor of $26 for a first late payment and $37 for a subsequent violation within the following six months to $27 and $38 respectively.