2022 CFPB Annual Adjustments to Regulation Z Thresholds
In my last blog post, I opened with my plans to plan for next year. I have to admit, I still have not gotten around to it, and I feel like time is just slipping through my fingers! I can see my new planner in my bookshelf, taunting me – no, daring me – to start filling its pages with deadlines and fun plans to look forward to. Thankfully, not everyone is as behind as me. Each year, the Consumer Financial Protection Bureau (CFPB) provides annual adjustments to certain dollar amount thresholds covered in Regulation Z. This year has been speeding by, but we didn’t want to say “Happy New Year” without providing an update! As the holiday season can provide a bit of a slowdown during the workday, this may be a good time to review any internal procedures and documents to ensure these thresholds are up-to-date when everyone clocks in on January 3rd.
The adjustments can be found in the final rule and at the CFPB’s webpage for Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages), and are effective as of January 1, 2022.
Section 1026.52(b)(1)(ii) provides that a credit union “may impose a fee for violating the terms or other requirements of an account if the dollar amount does not exceed” the safe harbor amounts. For 2022, the penalty fee safe harbor amounts have both been increased:
- $30 for a first late payment; and
- $41 for each subsequent late payment over six months.
However, the bureau did not increase the threshold that triggers requirements to disclose minimum interest charges. This threshold remains at $1.00.
Last year’s post on the annual adjustments provides a helpful summary of HOEPA’s high-cost coverage tests.
Section 1026.32(a)(1)(ii) outlines the points-and-fees test. The annual adjustment will increase the threshold for 2022 so a loan will be considered high cost if points and fees exceed 5% of the total loan amount for loans $22,969 or more; or if the loan amount is less than $22,969, the points and fees exceed the lesser of 8% or $1,148.
Section 1026.43(e)(2) provides the definition of General QM loans. The thresholds for the spread between the APR and the APOR for 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 $69,908 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;
- .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, the thresholds for total points and fees in 2022 for all categories of QMs will be:
- 3 percent of the total loan amount of $114,847 or more;
- $3,445 for loan amounts from $68,908 and up, but less than $114,847;
- 5 percent of the total loan amount for loans of $22,969 and up, but less than $68,908;
- $1,148 for loans of $14,356 and up, but less than $22,969; and
- 8 percent of the total loan amount for loans less than $14,356.
Asset-Size Threshold Adjustments
The threshold for the HMDA definition of "financial institution" is increasing in 2022, from $48 million to $50 million.
Regulation Z - Small Creditor
Certain rules in Regulation Z provide exemptions for "small creditors." Those exemptions include the Ability to Repay/Qualified Mortgage rule and the escrow requirement for higher-priced mortgage loans. The threshold to qualify as a small creditor is increasing in 2022, from $2.230 billion to $2.336 billion.
Holiday Closure: NAFCU will be closed Friday through Monday in observance of Christmas. We hope everyone has a safe and happy holiday; we’ll be back online on Tuesday, December 28th, and back to blogging on Wednesday, December 29th.
About the Author
Rebecca Tetreau joined NAFCU as regulatory compliance counsel in February 2021. In this role, Rebecca helps credit unions with a variety of federal regulatory compliance issues.