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CFPB annual threshold adjustments for Regulation Z

The Consumer Financial Protection Bureau (“CFPB”) is required to annually calculate the dollar amounts for several provisions in Regulation Z. 

The CFPB recently issued a final rule amending the dollar amount thresholds under the HOEPA “points and fees” provisions of Regulation Z (12 CFR § 1026.32))a)(1)(ii)), referred to as “Section 32” by the industry, and the qualified mortgage “points and fees” provisions under Regulation Z (12 CFR § 1026.43((e)(3)(i)) based on the annual percentage change provided in the Consumer Price Index (CPI-U) in effect on June 1, 2021. Starting this year, the CFPB is also updating the loan amount thresholds for the APOR, price-based limits.

The threshold adjustments will be effective Jan. 1, 2022.

HOEPA Points and Fees Thresholds

The adjusted HOEPA points-and-fees dollar trigger for high-cost mortgages in 2022 will increase from $1,103 to $1,148. Additionally, the total loan amount threshold used to determine whether a loan is subject to the “total points and fees” provision of HOEPA, or Section 32 will increase from $22,052 for 2021 to $22,969 for 2022.

The fee-based trigger is used to determine whether the total points and fees payable by the consumer at or before loan closing subjects that loan to Section 32. Section 32 applies, in part, to certain loans if the total points and fees payable by the consumer at or before loan closing exceed the greater of eight percent (8%) of the total loan amount or a dollar amount threshold.

In addition to the Federal Section 32 test, this annual adjustment applies to the following state high cost tests: Colorado, Illinois, Maryland, Massachusetts, Oklahoma, Pennsylvania, Texas, and Utah. Please click here for more information.

To see DocMagic’s memorandum regarding HOEPA determination, please see Section 32 High Cost Calculation.

Qualified Mortgage Points and Fees Thresholds

The final rule updates the dollar amount thresholds for determining whether a loan is a qualified mortgage (“QM”) under the “points and fees” provision specified in Regulation Z (12 CFR § 1026.43(e)(3)(i)).

2021                                                                                        

2022

Loan Amount

Limitation

Loan Amount

Limitation

Greater than or equal to $110,260

3% of total loan amount

Greater than or equal to $114,847

3% of total loan amount

Greater than or equal to $66,156, but less than $110,260

$3,297

Greater than or equal to $68,908, but less than $114,847

$3,445

Greater than or equal to $22,052, but less than $66,156

5% of total loan amount

Greater than or equal to $22,969, but less than $68,908

5% of total loan amount

Greater than or equal to $13,783, but less than $22,052

$1,103

Greater than or equal to $14,356, but less than $22,969

$1,148

Less than $13,783

8% of total loan amount

Less than $14,356

8% of total loan amount

 

Qualified Mortgage APOR Price-Based Limits

In addition, to satisfy the General QM loan definition effective on March 1, 2021, the APR 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:

2021 Loan Amounts

Price Limitation

First-Lien Non-MH

First-Lien MH

Subordinate Lien

Greater than $114,847

2.25% + APOR

2.25% + APOR

3.5% + APOR

Less than $114,847 but greater than or equal to $68,908

3.5% + APOR

6.5% + APOR

Less than $68,908

6.5% + APOR

6.5% + APOR


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Topics from this blog: Compliance CFPB

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