A regulatory alert on Truth in Lending (Regulation Z) annual threshold adjustments for various loans – which take effect Jan. 1 – was issued Wednesday to credit unions by their federal regulator.
The alert from the National Credit Union Administration (NCUA) notes that the adjustments for credit cards, closed-end home equity loans and qualified mortgages (QMs) are based on the annual percentage change reflected in the Consumer Price Index (CPI) as of June 1, 2021. The Consumer Financial Protection Bureau (CFPB) is required to calculate the dollar amounts for several provisions in Reg Z each year.
In late October, the CFPB increased many, but not all, of the threshold dollar amounts for the loans covered under Reg Z. No change was made in the $1 threshold triggering minimum interest charge disclosure requirements on open-end consumer credit plans, for example.
For open-end credit plans under the CARD Act, there were increases to $30 in the adjusted dollar amount for safe harbor for a first violation penalty fee and to $41 in the threshold for a subsequent violation penalty fee. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2022 will be $22,969, the agency said; the adjusted points-and-fees dollar trigger will be $1,148.
For QMs, the changes are a bit more complicated. The thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) in 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 $68,908 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;
- 3.5 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.
For all categories of QMs, the reported thresholds for total points and fees in 2022 will be:
- 3% of the total loan amount for a loan greater than or equal to $114,847;
- $3,445 for a loan amount greater than or equal to $68,908 but less than $114,847;
- 5% of the total loan amount for a loan greater than or equal to $22,969 but less than $68,908;
- $1,148 for a loan amount greater than or equal to $14,356 but less than $22,969; and
- 8% of the total loan amount for a loan amount less than $14,356.