[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Rules and Regulations]
[Pages 78831-78837]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28023]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Truth in Lending (Regulation Z) Annual Threshold Adjustments 
(Credit Cards, HOEPA, and Qualified Mortgages)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official interpretation.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau) is issuing 
this final rule amending the regulation text and official 
interpretations for Regulation Z, which implements the Truth in Lending 
Act (TILA). The Bureau calculates the dollar amounts for several 
provisions in Regulation Z annually; this final rule revises, as 
applicable, the dollar amounts for provisions implementing TILA and 
amendments to TILA, including under the Home Ownership and Equity 
Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Dodd-Frank Act). The Bureau is adjusting 
these amounts, where appropriate, based on the annual percentage change 
reflected in the Consumer Price Index (CPI) in effect on June 1, 2022.

DATES: This final rule is effective January 1, 2023.

FOR FURTHER INFORMATION CONTACT: Thomas Dowell, Senior Counsel, Office 
of Regulations, at (202) 435-7700. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: The Bureau is amending the regulation text 
and official interpretations for Regulation Z, which implements TILA, 
to update the dollar amounts of various thresholds that it must adjust 
annually to reflect the annual percentage change in the CPI as 
published by the Bureau of Labor Statistics (BLS). Specifically, for 
open-end consumer credit plans under TILA, the threshold that triggers 
requirements to disclose minimum interest charges will remain unchanged 
at $1.00 in 2023. For HOEPA loans, the adjusted total loan amount 
threshold for high-cost mortgages in 2023 will be $24,866. The adjusted 
points-and-fees dollar trigger for high-cost mortgages in 2023 will be 
$1,243. For qualified mortgages (QMs) under the General QM loan 
definition in Sec.  1026.43(e)(2), the thresholds for the spread 
between the annual percentage rate (APR) and the average prime offer 
rate (APOR) in 2023 will be: 2.25 or more percentage points for a 
first-lien covered transaction with

[[Page 78832]]

a loan amount greater than or equal to $124,331; 3.5 or more percentage 
points for a first-lien covered transaction with a loan amount greater 
than or equal to $74,599 but less than $124,331; 6.5 or more percentage 
points for a first-lien covered transaction with a loan amount less 
than $74,599; 6.5 or more percentage points for a first-lien covered 
transaction secured by a manufactured home with a loan amount less than 
$124,331; 3.5 or more percentage points for a subordinate-lien covered 
transaction with a loan amount greater than or equal to $74,599; or 6.5 
or more percentage points for a subordinate-lien covered transaction 
with a loan amount less than $74,599. For all categories of QMs, the 
thresholds for total points and fees in 2023 will be 3 percent of the 
total loan amount for a loan greater than or equal to $124,331; $3,730 
for a loan amount greater than or equal to $74,599 but less than 
$124,331; 5 percent of the total loan amount for a loan greater than or 
equal to $24,866 but less than $74,599; $1,243 for a loan amount 
greater than or equal to $15,541 but less than $24,866; and 8 percent 
of the total loan amount for a loan amount less than $15,541.\1\
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    \1\ The QM categories in Regulation Z appear at 12 CFR 
1026.43(e)(2), (e)(4), (e)(5), (e)(6), and (e)(7). Note that 12 CFR 
1026.43(e)(6) applies only to covered transactions for which the 
application was received before April 1, 2016.
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I. Background

A. Credit Card Annual Adjustments

Minimum Interest Charge Disclosure Thresholds
    Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z 
implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections 
1026.6(b)(2)(iii) and 1026.60(b)(3) require creditors to disclose any 
minimum interest charge exceeding $1.00 that could be imposed during a 
billing cycle. These provisions also state that, for open-end consumer 
credit plans, the Bureau shall calculate the minimum interest charge 
thresholds annually using the CPI that was in effect on the preceding 
June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W) for this adjustment.\2\ If the cumulative 
change in the adjusted minimum value derived from applying the annual 
CPI-W level to the current amounts in Sec. Sec.  1026.6(b)(2)(iii) and 
1026.60(b)(3) has risen by a whole dollar, the Bureau will increase the 
minimum interest charge amounts set forth in the regulation by $1.00. 
The Bureau bases its 2023 adjustment analysis on the CPI-W index in 
effect on June 1, 2022, as reported by BLS on May 11, 2022.\3\ As a 
result, the adjustment reflects the percentage change in the CPI-W from 
April 2021 to April 2022. The adjustment analysis accounts for an 8.9 
percent increase in the CPI-W from April 2021 to April 2022. This 
increase in the CPI-W when applied to the current amounts in Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3) does not trigger an increase in the 
minimum interest charge threshold of at least $1.00, and the Bureau, 
therefore, is not amending Sec. Sec.  1026.6(b)(2)(iii) and 
1026.60(b)(3).
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    \2\ The CPI-W is a subset of the Consumer Price Index for All 
Urban Consumers (CPI-U) index and represents approximately 29 
percent of the U.S. population.
    \3\ BLS publishes Consumer Price Indices monthly, usually in the 
middle of each calendar month. Thus, the CPI-W reported on May 11, 
2022, was the most current as of June 1, 2022.
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B. HOEPA Annual Threshold Adjustments

    Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431 
of the Dodd-Frank Act,\4\ which amended the HOEPA points-and-fees 
coverage test. Under Sec.  1026.32(a)(1)(ii)(A) and (B), in assessing 
whether a transaction is a high-cost mortgage due to points and fees 
the creditor is charging, the applicable points-and-fees coverage test 
depends on whether the total loan amount is for $20,000 or more, or for 
less than $20,000. Section 1026.32(a)(1)(ii) provides that the Bureau 
recalculate this threshold amount annually using the CPI index in 
effect on the preceding June 1; the Bureau uses the CPI-U for this 
adjustment.\5\ The Bureau bases the 2023 adjustment on the CPI-U index 
in effect on June 1, 2022, as reported by BLS on May 11, 2022. As a 
result, the adjustment reflects the percentage change in the CPI-U from 
April 2021 to April 2022, which is an increase of 8.3 percent. The 
adjustment to $24,866 here reflects the 8.3 percent increase in the 
CPI-U index from April 2021 to April 2022 rounded to the nearest whole 
dollar amount for ease of compliance.
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    \4\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Pub. L. 111-203, 124 Stat. 1376 (2010).
    \5\ The CPI-U is based on all urban consumers and represents 
approximately 93 percent of the U.S. population.
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    Under Sec.  1026.32(a)(1)(ii)(B), the HOEPA points-and-fees 
threshold is the lesser of 8 percent of the total loan amount or 
$1,000. Section 1026.32(a)(1)(ii)(B) provides that the Bureau will 
recalculate the dollar amount threshold annually using the CPI index in 
effect on the preceding June 1; the Bureau uses the CPI-U for this 
adjustment. The Bureau bases the 2023 adjustment on the CPI-U index in 
effect on June 1, 2022, as reported by BLS on May 11, 2022. As a 
result, the adjustment reflects the percentage change in CPI-U from 
April 2021 to April 2022, which is an increase of 8.3 percent. The 
adjustment to $1,243 here reflects the 8.3 percent increase in the CPI-
U index from April 2021 to April 2022 rounded to the nearest whole 
dollar amount for ease of compliance.

C. QM Annual Threshold Adjustments

    The Bureau's Regulation Z implements sections 1411 and 1412 of the 
Dodd-Frank Act, which generally require creditors to make a reasonable, 
good-faith determination of a consumer's ability to repay any consumer 
credit transaction secured by a dwelling and establishes certain 
protections from liability under this requirement for QMs.
    On December 10, 2020, the Bureau issued a final rule amending the 
General QM loan definition in Sec.  1026.43(e)(2).\6\ The final rule 
established pricing thresholds in Sec.  1026.43(e)(2)(vi)(A) through 
(F) based on the spread of a loan's APR compared to the APOR for a 
comparable transaction as of the date the interest rate is set. To 
satisfy the General QM loan definition, a loan's APR must be below the 
applicable pricing threshold and must satisfy other requirements in 
Sec.  1026.43(e)(2). Specifically, under Sec.  1026.43(e)(2)(vi), a 
covered transaction is a QM if the APR does not exceed the APOR for a 
comparable transaction as of the date the interest rate is set by: 2.25 
or more percentage points for a first-lien covered transaction with a 
loan amount greater than or equal to $110,260 (indexed for inflation); 
3.5 or more percentage points for a first-lien covered transaction with 
a loan amount greater than or equal to $66,156 (indexed for inflation) 
but less than $110,260 (indexed for inflation); 6.5 or more percentage 
points for a first-lien covered transaction with a loan amount less 
than $66,156 (indexed for inflation); 6.5 or more percentage points for 
a first-lien covered transaction secured by a manufactured home with a 
loan amount less than $110,260 (indexed for inflation); 3.5 or more 
percentage points for a subordinate-lien covered transaction with a 
loan amount greater than or equal to $66,156 (indexed for inflation); 
or 6.5 or more

[[Page 78833]]

percentage points for a subordinate-lien covered transaction with a 
loan amount less than $66,156 (indexed for inflation).\7\ The rule 
states that the Bureau will adjust the loan amounts in Sec.  
1026.43(e)(2)(vi) annually on January 1 by the annual percentage change 
in the CPI-U that was in effect on the preceding June 1.\8\
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    \6\ 85 FR 86308 (Dec. 29, 2020). This final rule was initially 
effective on March 1, 2021, with a mandatory compliance date of July 
1, 2021. On April 27, 2021, the Bureau issued a final rule effective 
June 30, 2021, which extended the mandatory compliance date of the 
final rule published on December 29, 2020, at 85 FR 86308, until 
October 1, 2022. 86 FR 22844 (Apr. 30, 2021).
    \7\ The loan amounts in the regulatory text reflect the CPI-U in 
effect on June 1, 2020.
    \8\ See comment 43(e)(2)(vi)-3.
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    Regulation Z also contains points and fees limits applicable to all 
categories of QMs. Under Sec.  1026.43(e)(3)(i), a covered transaction 
is not a QM if the transaction's total points and fees exceed: 3 
percent of the total loan amount for a loan amount greater than or 
equal to $100,000 (indexed for inflation); $3,000 (indexed for 
inflation) for a loan amount greater than or equal to $60,000 (indexed 
for inflation) but less than $100,000 (indexed for inflation); 5 
percent of the total loan amount for loans greater than or equal to 
$20,000 (indexed for inflation) but less than $60,000 (indexed for 
inflation); $1,000 (indexed for inflation) for a loan amount greater 
than or equal to $12,500 (indexed for inflation) but less than $20,000 
(indexed for inflation); or 8 percent of the total loan amount for 
loans less than $12,500 (indexed for inflation). Section 
1026.43(e)(3)(ii) provides that the Bureau will recalculate the limits 
and loan amounts in Sec.  1026.43(e)(3)(i) annually for inflation using 
the CPI-U index in effect on the preceding June 1.
    The Bureau bases the 2023 adjustment to the loan amounts applicable 
to the pricing thresholds for the General QM loan definition and the 
points and fees limits for all categories of QM on the CPI-U index in 
effect on June 1, 2022, as reported by BLS on May 11, 2022. As a 
result, the adjustment reflects the percentage change in CPI-U from 
April 2021 to April 2022, which is an increase of 8.3 percent. The 2023 
adjustment \9\ adopted here reflects an 8.3 percent increase in the 
CPI-U index for this period rounded to whole dollars for ease of 
compliance.
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    \9\ For 2023, a covered transaction is a qualified mortgage if 
the APR does not exceed the APOR for a comparable transaction as of 
the date the interest rate is set by: 2.25 or more percentage points 
for a first-lien covered transaction with a loan amount greater than 
or equal to $124,331; 3.5 or more percentage points for a first-lien 
covered transaction with a loan amount greater than or equal to 
$74,599 but less than $124,331; 6.5 or more percentage points for a 
first-lien covered transaction with a loan amount less than $74,599; 
6.5 or more percentage points for a first-lien covered transaction 
secured by a manufactured home with a loan amount less than 
$124,331; 3.5 or more percentage points for a subordinate-lien 
covered transaction with a loan amount greater than or equal to 
$74,599; or 6.5 or more percentage points for a subordinate-lien 
covered transaction with a loan amount less than $74,599. 
Additionally, a covered transaction is not a qualified mortgage if 
the transaction's total points and fees exceed 3 percent of the 
total loan amount for a loan amount greater than or equal to 
$124,331; $3,730 for a loan amount greater than or equal to $74,599 
but less than $124,331; 5 percent of the total loan amount for loans 
greater than or equal to $24,866 but less than $74,599; $1,243 for a 
loan amount greater than or equal to $15,541 but less than $24,866; 
or 8 percent of the total loan amount for loans less than $15,541.
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II. Adjustment and Commentary Revision

A. Credit Card Annual Adjustments

Minimum Interest Charge Disclosure Thresholds--Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3)
    The minimum interest charge amounts for Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for 
the year 2023. Accordingly, the Bureau is not amending these sections 
of Regulation Z.

B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3

    Effective January 1, 2023, for purposes of determining under Sec.  
1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to 
which a transaction is subject, the total loan amount threshold figure 
is $24,866, and the adjusted points-and-fees dollar trigger under Sec.  
1026.32(a)(1)(ii)(B) is $1,243. If the total loan amount for a 
transaction is $24,866 or more, and the points-and-fees amount exceeds 
5 percent of the total loan amount, the transaction is a high-cost 
mortgage. If the total loan amount for a transaction is less than 
$24,866, and the points-and-fees amount exceeds the lesser of the 
adjusted points-and-fees dollar trigger of $1,243 or 8 percent of the 
total loan amount, the transaction is a high-cost mortgage. The Bureau 
is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments 
for each year, to reflect for 2023 the new points-and-fees dollar 
trigger and the new loan amount dollar threshold, respectively.

C. Qualified Mortgages Annual Threshold Adjustments

    Effective January 1, 2023, to satisfy Sec.  1026.43(e)(2)(vi) under 
the General QM loan definition, the annual percentage rate 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: 2.25 or 
more percentage points for a first-lien covered transaction with a loan 
amount greater than or equal to $124,331; 3.5 or more percentage points 
for a first-lien covered transaction with a loan amount greater than or 
equal to $74,599 but less than $124,331; 6.5 or more percentage points 
for a first-lien covered transaction with a loan amount less than 
$74,599; 6.5 or more percentage points for a first-lien covered 
transaction secured by a manufactured home with a loan amount less than 
$124,331; 3.5 or more percentage points for a subordinate-lien covered 
transaction with a loan amount greater than or equal to $74,599; or 6.5 
or more percentage points for a subordinate-lien covered transaction 
with a loan amount less than $74,599. Accordingly, the Bureau is 
amending comment 43(e)(2)(vi)-3, which lists the adjustments for each 
year, to reflect the new dollar threshold amounts for Sec.  
1026.43(e)(2)(vi)(A) through (F).
    Effective January 1, 2023, a covered transaction is not a qualified 
mortgage if, pursuant to Sec.  1026.43(e)(3), the transaction's total 
points and fees exceed 3 percent of the total loan amount for a loan 
amount greater than or equal to $124,331; $3,730 for a loan amount 
greater than or equal to $74,599 but less than $124,331; 5 percent of 
the total loan amount for loans greater than or equal to $24,866 but 
less than $74,599; $1,243 for a loan amount greater than or equal to 
$15,541 but less than $24,866; or 8 percent of the total loan amount 
for loans less than $15,541. The Bureau is amending comment 
43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect 
the new dollar threshold amounts for 2023.

III. Procedural Requirements

A. Administrative Procedure Act

    The Administrative Procedure Act does not require notice and 
opportunity for public comment if an agency finds that notice and 
public comment are impracticable, unnecessary, or contrary to the 
public interest.\10\ Pursuant to this final rule, the Bureau adds 
comments 32(a)(1)(ii)-1.ix, 32(a)(1)(ii)-3.ix, 43(e)(2)(vi)-3.ii, and 
43(e)(3)(ii)-1.ix to update the exemption thresholds. The amendments in 
this final rule are technical and non-discretionary, as they merely 
apply the method previously established in Regulation Z for determining 
adjustments to the thresholds. For these reasons, the Bureau has 
determined that publishing a notice of proposed rulemaking and 
providing opportunity for public comment are unnecessary. The 
amendments, therefore, are adopted in final form.
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    \10\ 5 U.S.C. 553(b)(B).

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[[Page 78834]]

    For the same reasons, the Bureau finds that there is good cause to 
make this rule effective on January 1, 2023. Section 553(d) of the APA 
generally requires publication of a final rule not less than 30 days 
before its effective date, except (1) a substantive rule which grants 
or recognizes an exemption or relieves a restriction; (2) interpretive 
rules and statements of policy; or (3) as otherwise provided by the 
agency for good cause found and published with the rule. 5 U.S.C. 
553(d). At a minimum, the Bureau believes the amendments made by this 
rule fall under the third exception to section 553(d). As already 
stated above, the amendments in this final rule are technical and non-
discretionary, as they merely apply the method previously established 
in Regulation Z for determining adjustments to the thresholds.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\11\ As 
noted previously, the Bureau has determined that it is unnecessary to 
publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirement relating to an initial and final 
regulatory flexibility analysis do not apply.
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    \11\ 5 U.S.C. 603(a), 604(a).
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C. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\12\ the 
Bureau reviewed this final rule. The Bureau has determined that this 
final rule does not create any new information collections or 
substantially revise any existing collections.
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    \12\ 44 U.S.C. 3506; 5 CFR part 1320.
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D. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Bureau will submit a report containing this rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the United States prior 
to the rule taking effect. The Office of Information and Regulatory 
Affairs (OIRA) has designated this rule as not a ``major rule'' as 
defined by 5 U.S.C. 804(2).

E. Signing Authority

    Senior Advisor Brian Shearer, having reviewed and approved this 
document, is delegating the authority to sign this document 
electronically to Laura Galban, Bureau Federal Register Liaison, for 
purposes of publication in the Federal Register.

List of Subjects in 12 CFR Part 1026

    Advertising, Banks, banking, Consumer protection, Credit, Credit 
unions, Mortgages, National banks, Reporting and recordkeeping 
requirements, Savings associations, Truth in lending.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends 
Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 continues to read as follows:

    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
2. In Supplement I to Part 1026:
0
a. Under Section 1026.32--Requirements for High-Cost Mortgages, revise 
Paragraph 32(a)(1)(ii); and
0
b. Under Section 1026.43--Minimum Standards for Transactions Secured by 
a Dwelling, revise Paragraphs 43(e)(2)(vi) and 43(e)(3)(ii).
    The revisions read as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Section 1026.32--Requirements for High-Cost Mortgages

* * * * *
    Paragraph 32(a)(1)(ii).
    1. Annual adjustment of $1,000 amount. The $1,000 figure in Sec.  
1026.32(a)(1)(ii)(B) is adjusted annually on January 1 by the annual 
percentage change in the CPI that was in effect on the preceding June 
1. The Bureau will publish adjustments after the June figures become 
available each year.
    i. For 2015, $1,020, reflecting a 2 percent increase in the CPI-U 
from June 2013 to June 2014, rounded to the nearest whole dollar.
    ii. For 2016, $1,017, reflecting a 0.2 percent decrease in the CPI-
U from June 2014 to June 2015, rounded to the nearest whole dollar.
    iii. For 2017, $1,029, reflecting a 1.1 percent increase in the 
CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.
    iv. For 2018, $1,052, reflecting a 2.2 percent increase in the CPI-
U from June 2016 to June 2017, rounded to the nearest whole dollar.
    v. For 2019, $1,077, reflecting a 2.5 percent increase in the CPI-U 
from June 2017 to June 2018, rounded to the nearest whole dollar.
    vi. For 2020, $1,099, reflecting a 2 percent increase in the CPI-U 
from June 2018 to June 2019, rounded to the nearest whole dollar.
    vii. For 2021, $1,103, reflecting a 0.3 percent increase in the 
CPI-U from June 2019 to June 2020, rounded to the nearest whole dollar.
    viii. For 2022, $1,148, reflecting a 4.2 percent increase in the 
CPI-U from June 2020 to June 2021, rounded to the nearest whole dollar.
    ix. For 2023, $1,243, reflecting an 8.3 percent increase in the 
CPI-U from June 2021 to June 2022, rounded to the nearest whole dollar.
    2. Historical adjustment of $400 amount. Prior to January 10, 2014, 
a mortgage loan was covered by Sec.  1026.32 if the total points and 
fees payable by the consumer at or before loan consummation exceeded 
the greater of $400 or 8 percent of the total loan amount. The $400 
figure was adjusted annually on January 1 by the annual percentage 
change in the CPI that was in effect on the preceding June 1, as 
follows:
    i. For 1996, $412, reflecting a 3 percent increase in the CPI-U 
from June 1994 to June 1995, rounded to the nearest whole dollar.
    ii. For 1997, $424, reflecting a 2.9 percent increase in the CPI-U 
from June 1995 to June 1996, rounded to the nearest whole dollar.
    iii. For 1998, $435, reflecting a 2.5 percent increase in the CPI-U 
from June 1996 to June 1997, rounded to the nearest whole dollar.
    iv. For 1999, $441, reflecting a 1.4 percent increase in the CPI-U 
from June 1997 to June 1998, rounded to the nearest whole dollar.
    v. For 2000, $451, reflecting a 2.3 percent increase in the CPI-U 
from June 1998 to June 1999, rounded to the nearest whole dollar.
    vi. For 2001, $465, reflecting a 3.1 percent increase in the CPI-U 
from June 1999 to June 2000, rounded to the nearest whole dollar.
    vii. For 2002, $480, reflecting a 3.27 percent increase in the CPI-
U from June 2000 to June 2001, rounded to the nearest whole dollar.
    viii. For 2003, $488, reflecting a 1.64 percent increase in the 
CPI-U from June 2001 to June 2002, rounded to the nearest whole dollar.
    ix. For 2004, $499, reflecting a 2.22 percent increase in the CPI-U 
from June 2002 to June 2003, rounded to the nearest whole dollar.
    x. For 2005, $510, reflecting a 2.29 percent increase in the CPI-U 
from June

[[Page 78835]]

2003 to June 2004, rounded to the nearest whole dollar.
    xi. For 2006, $528, reflecting a 3.51 percent increase in the CPI-U 
from June 2004 to June 2005, rounded to the nearest whole dollar.
    xii. For 2007, $547, reflecting a 3.55 percent increase in the CPI-
U from June 2005 to June 2006, rounded to the nearest whole dollar.
    xiii. For 2008, $561, reflecting a 2.56 percent increase in the 
CPI-U from June 2006 to June 2007, rounded to the nearest whole dollar.
    xiv. For 2009, $583, reflecting a 3.94 percent increase in the CPI-
U from June 2007 to June 2008, rounded to the nearest whole dollar.
    xv. For 2010, $579, reflecting a 0.74 percent decrease in the CPI-U 
from June 2008 to June 2009, rounded to the nearest whole dollar.
    xvi. For 2011, $592, reflecting a 2.2 percent increase in the CPI-U 
from June 2009 to June 2010, rounded to the nearest whole dollar.
    xvii. For 2012, $611, reflecting a 3.2 percent increase in the CPI-
U from June 2010 to June 2011, rounded to the nearest whole dollar.
    xviii. For 2013, $625, reflecting a 2.3 percent increase in the 
CPI-U from June 2011 to June 2012, rounded to the nearest whole dollar.
    xix. For 2014, $632, reflecting a 1.1 percent increase in the CPI-U 
from June 2012 to June 2013, rounded to the nearest whole dollar.
    3. Applicable threshold. For purposes of Sec.  1026.32(a)(1)(ii), a 
creditor must determine the applicable points and fees threshold based 
on the face amount of the note (or, in the case of an open-end credit 
plan, the credit limit for the plan when the account is opened). 
However, the creditor must apply the allowable points and fees 
percentage to the ``total loan amount,'' as defined in Sec.  
1026.32(b)(4). For closed-end credit transactions, the total loan 
amount may be different than the face amount of the note. The $20,000 
amount in Sec.  1026.32(a)(1)(ii)(A) and (B) is adjusted annually on 
January 1 by the annual percentage change in the CPI that was in effect 
on the preceding June 1.
    i. For 2015, $20,391, reflecting a 2 percent increase in the CPI-U 
from June 2013 to June 2014, rounded to the nearest whole dollar.
    ii. For 2016, $20,350, reflecting a .2 percent decrease in the CPI-
U from June 2014 to June 2015, rounded to the nearest whole dollar.
    iii. For 2017, $20,579, reflecting a 1.1 percent increase in the 
CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.
    iv. For 2018, $21,032, reflecting a 2.2 percent increase in the 
CPI-U from June 2016 to June 2017, rounded to the nearest whole dollar.
    v. For 2019, $21,549, reflecting a 2.5 percent increase in the CPI-
U from June 2017 to June 2018, rounded to the nearest whole dollar.
    vi. For 2020, $21,980, reflecting a 2 percent increase in the CPI-U 
from June 2018 to June 2019, rounded to the nearest whole dollar.
    vii. For 2021, $22,052 reflecting a 0.3 percent increase in the 
CPI-U from June 2019 to June 2020, rounded to the nearest whole dollar.
    viii. For 2022, $22,969 reflecting a 4.2 percent increase in the 
CPI-U from June 2020 to June 2021, rounded to the nearest whole dollar.
    ix. For 2023, $24,866 reflecting an 8.3 percent increase in the 
CPI-U from June 2021 to June 2022, rounded to the nearest whole dollar.
* * * * *

Section 1026.43--Minimum Standards for Transactions Secured by a 
Dwelling

* * * * *
    Paragraph 43(e)(2)(vi).
    1. Determining the average prime offer rate for a comparable 
transaction as of the date the interest rate is set. For guidance on 
determining the average prime offer rate for a comparable transaction 
as of the date the interest rate is set, see comments 43(b)(4)-1 
through -3.
    2. Determination of applicable threshold. A creditor must determine 
the applicable threshold by determining which category the loan falls 
into based on the face amount of the note (the ``loan amount'' as 
defined in Sec.  1026.43(b)(5)). For example, for a first-lien covered 
transaction with a loan amount of $75,000, the loan would fall into the 
tier for loans greater than or equal to $66,156 (indexed for inflation) 
but less than $110,260 (indexed for inflation), for which the 
applicable threshold is 3.5 or more percentage points.
    3. Annual adjustment for inflation. The dollar amounts in Sec.  
1026.43(e)(2)(vi) will be adjusted annually on January 1 by the annual 
percentage change in the CPI-U that was in effect on the preceding June 
1. The Bureau will publish adjustments after the June figures become 
available each year.
    i. For 2022, reflecting a 4.2 percent increase in the CPI-U that 
was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate 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:
    A. For a first-lien covered transaction with a loan amount greater 
than or equal to $114,847, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount greater 
than or equal to $68,908 but less than $114,847, 3.5 or more percentage 
points;
    C. For a first-lien covered transaction with a loan amount less 
than $68,908, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a manufactured 
home with a loan amount less than $114,847, 6.5 or more percentage 
points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $68,908, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $68,908, 6.5 or more percentage points.
    ii. For 2023, reflecting an 8.3 percent increase in the CPI-U that 
was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate 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:
    A. For a first-lien covered transaction with a loan amount greater 
than or equal to $124,331, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount greater 
than or equal to $74,599 but less than $124,331, 3.5 or more percentage 
points;
    C. For a first-lien covered transaction with a loan amount less 
than $74,599, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a manufactured 
home with a loan amount less than $124,331, 6.5 or more percentage 
points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $74,599, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $74,599, 6.5 or more percentage points.
    4. Determining the annual percentage rate for certain loans for 
which the interest rate may or will change.
    i. In general. The commentary to Sec.  1026.17(c)(1) and other 
provisions in subpart C address how to determine the annual percentage 
rate disclosures for closed-end credit transactions. Provisions in 
Sec.  1026.32(a)(3) address how to determine the annual percentage rate 
to determine coverage under Sec.  1026.32(a)(1)(i). Section 
1026.43(e)(2)(vi) requires, for the purposes of Sec.  
1026.43(e)(2)(vi), a

[[Page 78836]]

different determination of the annual percentage rate for a qualified 
mortgage under Sec.  1026.43(e)(2) for which the interest rate may or 
will change within the first five years after the date on which the 
first regular periodic payment will be due. An identical special rule 
for determining the annual percentage rate for such a loan also applies 
for purposes of Sec.  1026.43(b)(4).
    ii. Loans for which the interest rate may or will change. Section 
1026.43(e)(2)(vi) includes a special rule for determining the annual 
percentage rate for a loan for which the interest rate may or will 
change within the first five years after the date on which the first 
regular periodic payment will be due. This rule applies to adjustable-
rate mortgages that have a fixed-rate period of five years or less and 
to step-rate mortgages for which the interest rate changes within that 
five-year period.
    iii. Maximum interest rate during the first five years. For a loan 
for which the interest rate may or will change within the first five 
years after the date on which the first regular periodic payment will 
be due, a creditor must treat the maximum interest rate that could 
apply at any time during that five-year period as the interest rate for 
the full term of the loan to determine the annual percentage rate for 
purposes of Sec.  1026.43(e)(2)(vi), regardless of whether the maximum 
interest rate is reached at the first or subsequent adjustment during 
the five-year period. For additional instruction on how to determine 
the maximum interest rate during the first five years after the date on 
which the first regular periodic payment will be due, see comments 
43(e)(2)(iv)-3 and -4.
    iv. Treatment of the maximum interest rate in determining the 
annual percentage rate. For a loan for which the interest rate may or 
will change within the first five years after the date on which the 
first regular periodic payment will be due, the creditor must determine 
the annual percentage rate for purposes of Sec.  1026.43(e)(2)(vi) by 
treating the maximum interest rate that may apply within the first five 
years as the interest rate for the full term of the loan. For example, 
assume an adjustable-rate mortgage with a loan term of 30 years and an 
initial discounted rate of 5.0 percent that is fixed for the first 
three years. Assume that the maximum interest rate during the first 
five years after the date on which the first regular periodic payment 
will be due is 7.0 percent. Pursuant to Sec.  1026.43(e)(2)(vi), the 
creditor must determine the annual percentage rate based on an interest 
rate of 7.0 percent applied for the full 30-year loan term.
    5. Meaning of a manufactured home. For purposes of Sec.  
1026.43(e)(2)(vi)(D), manufactured home means any residential structure 
as defined under regulations of the U.S. Department of Housing and 
Urban Development (HUD) establishing manufactured home construction and 
safety standards (24 CFR 3280.2). Modular or other factory-built homes 
that do not meet the HUD code standards are not manufactured homes for 
purposes of Sec.  1026.43(e)(2)(vi)(D).
    6. Scope of threshold for transactions secured by a manufactured 
home. The threshold in Sec.  1026.43(e)(2)(vi)(D) applies to first-lien 
covered transactions less than $110,260 (indexed for inflation) that 
are secured by a manufactured home and land, or by a manufactured home 
only.
* * * * *
    Paragraph 43(e)(3)(ii).
    1. Annual adjustment for inflation. The dollar amounts, including 
the loan amounts, in Sec.  1026.43(e)(3)(i) will be adjusted annually 
on January 1 by the annual percentage change in the CPI-U that was in 
effect on the preceding June 1. The Bureau will publish adjustments 
after the June figures become available each year.
    i. For 2015, reflecting a 2 percent increase in the CPI-U that was 
reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transactions total points and fees do not 
exceed;
    A. For a loan amount greater than or equal to $101,953: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $61,172 but less than 
$101,953: $3,059;
    C. For a loan amount greater than or equal to $20,391 but less than 
$61,172: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,744 but less than 
$20,391; $1,020;
    E. For a loan amount less than $12,744: 8 percent of the total loan 
amount.
    ii. For 2016, reflecting a 0.2 percent decrease in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transactions total points and fees do not 
exceed;
    A. For a loan amount greater than or equal to $101,749: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $61,050 but less than 
$101,749: $3,052;
    C. For a loan amount greater than or equal to $20,350 but less than 
$61,050: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,719 but less than 
$20,350; $1,017;
    E. For a loan amount less than $12,719: 8 percent of the total loan 
amount.
    iii. For 2017, reflecting a 1.1 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transactions total points and fees do not 
exceed:
    A. For a loan amount greater than or equal to $102,894: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $61,737 but less than 
$102,894: $3,087;
    C. For a loan amount greater than or equal to $20,579 but less than 
$61,737: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,862 but less than 
$20,579: $1,029;
    E. For a loan amount less than $12,862: 8 percent of the total loan 
amount.
    iv. For 2018, reflecting a 2.2 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $105,158: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $63,095 but less than 
$105,158: $3,155;
    C. For a loan amount greater than or equal to $21,032 but less than 
$63,095: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,145 but less than 
$21,032: $1,052;
    E. For a loan amount less than $13,145: 8 percent of the total loan 
amount.
    v. For 2019, reflecting a 2.5 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $107,747: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $64,648 but less than 
$107,747: $3,232;
    C. For a loan amount greater than or equal to $21,549 but less than 
$64,648: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,468 but less than 
$21,549: $1,077;
    E. For a loan amount less than $13,468: 8 percent of the total loan 
amount.

[[Page 78837]]

    vi. For 2020, reflecting a 2 percent increase in the CPI-U that was 
reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $109,898: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $65,939 but less than 
$109,898: $3,297;
    C. For a loan amount greater than or equal to $21,980 but less than 
$65,939: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,737 but less than 
$21,980: $1,099;
    E. For a loan amount less than $13,737: 8 percent of the total loan 
amount.
    vii. For 2021, reflecting a 0.3 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $110,260: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $66,156 but less than 
$110,260: $3,308;
    C. For a loan amount greater than or equal to $22,052 but less than 
$66,156: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,783 but less than 
$22,052: $1,103;
    E. For a loan amount less than $13,783: 8 percent of the total loan 
amount.
    viii. For 2022, reflecting a 4.2 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $114,847: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $68,908 but less than 
$114,847: $3,445;
    C. For a loan amount greater than or equal to $22,969 but less than 
$68,908: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $14,356 but less than 
$22,969: $1,148;
    E. For a loan amount less than $14,356: 8 percent of the total loan 
amount.
    ix. For 2023, reflecting an 8.3 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $124,331: 3 percent 
of the total loan amount;
    B. For a loan amount greater than or equal to $74,599 but less than 
$124,331: $3,730;
    C. For a loan amount greater than or equal to $24,866 but less than 
$74,599: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $15,541 but less than 
$24,866: $1,243;
    E. For a loan amount less than $15,541: 8 percent of the total loan 
amount.
* * * * *

Laura Galban,
Federal Register Liaison, Consumer Financial Protection Bureau.
[FR Doc. 2022-28023 Filed 12-22-22; 8:45 am]
BILLING CODE 4810-AM-P