On June 17, 2016, the Consumer Financial Protection Bureau (“CFPB”) announced changes to the dollar amount thresholds for certain consumer credit transactions under the Truth in Lending Act (“TILA”). According to the notice submitted to the Federal Register, these new thresholds could affect minimum interest charges and safe harbor penalty fees under the Credit Card Accountability Responsibility and Disclosure Act (“CARD Act”). Additionally, the Bureau adjusted the threshold for the total loan amount and the points and fees dollar trigger for high-cost mortgages under the Home Ownership and Equity Protection Act (“HOEPA”) in addition to the threshold for the maximum points and fees for certain qualified mortgages under the Dodd-Frank Wall Street Reform and Consumer Protection.
The new rule will go into effect in January 2017. Of note, the majority of the Bureau’s proposed thresholds related to the CARD Act are that said thresholds should remain unchanged. For open-end consumer credit plans, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged in 2017 as will the adjusted dollar amount for the safe harbor for a first violation penalty fee, the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will remain unchanged.
The Bureau’s proposed threshold changes for HOEPA were more substantial, with the adjusted total loan amount threshold for high-cost mortgages in 2017 being $20,579. The adjusted points and fees dollar trigger for high-cost mortgages was proposed to be $1,029. The Bureau proposed that for the general rule to determine consumers’ ability to repay mortgage loans, the maximum threshold for total points and fees for qualified mortgages in 2017 will be 3 percent of the total loan amount for a loan greater than or equal to $102,894; $3,087 for a loan amount greater than or equal to $61,737 but less than $102,894; 5 percent of the total loan amount for a loan greater than or equal to $20,579 but less than $61,737; $1,029 for a loan amount greater than or equal to $12,862 but less than $20,579; and 8 percent of the total loan amount for a loan amount less than $12,862.