[Federal Register Volume 88, Number 182 (Thursday, September 21, 2023)]
[Rules and Regulations]
[Pages 65113-65118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20476]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 88, No. 182 / Thursday, September 21, 2023 /
Rules and Regulations
[[Page 65113]]
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1026
Truth in Lending (Regulation Z) Annual Threshold Adjustments
(Credit Cards, HOEPA, and Qualified Mortgages)
AGENCY: Consumer Financial Protection Bureau.
ACTION: Final rule; official interpretation.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is
issuing this final rule amending the regulation text and official
interpretations for Regulation Z, which implements the Truth in Lending
Act (TILA). The CFPB 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 CFPB is adjusting
these amounts, where appropriate, based on the annual percentage change
reflected in the Consumer Price Index (CPI) in effect on June 1, 2023.
DATES: This final rule is effective January 1, 2024.
FOR FURTHER INFORMATION CONTACT: Anna Boadwee and Adrien Fernandez,
Attorney-Advisors, Office of Regulations, at (202) 435-7700. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION: The CFPB 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 2024. For HOEPA loans, the adjusted total loan amount
threshold for high-cost mortgages in 2024 will be $26,092. The adjusted
points-and-fees dollar trigger for high-cost mortgages in 2024 will be
$1,305. 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) \1\ in 2024 will be: 2.25 or more percentage points for a
first-lien covered transaction with a loan amount greater than or equal
to $130,461; 3.5 or more percentage points for a first-lien covered
transaction with a loan amount greater than or equal to $78,277 but
less than $130,461; 6.5 or more percentage points for a first-lien
covered transaction with a loan amount less than $78,277; 6.5 or more
percentage points for a first-lien covered transaction secured by a
manufactured home with a loan amount less than $130,461; 3.5 or more
percentage points for a subordinate-lien covered transaction with a
loan amount greater than or equal to $78,277; or 6.5 or more percentage
points for a subordinate-lien covered transaction with a loan amount
less than $78,277. For all categories of QMs, the thresholds for total
points and fees in 2024 will be 3 percent of the total loan amount for
a loan greater than or equal to $130,461; $3,914 for a loan amount
greater than or equal to $78,277 but less than $130,461; 5 percent of
the total loan amount for a loan greater than or equal to $26,092 but
less than $78,277; $1,305 for a loan amount greater than or equal to
$16,308 but less than $26,092; and 8 percent of the total loan amount
for a loan amount less than $16,308.\2\
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\1\ On April 20, 2023, the CFPB published a document announcing
the availability of a revised version of its ``Methodology for
Determining Average Prime Offer Rates,'' which describes the data
and methodology used to calculate the average prime offer rate for
purposes of Regulation C and Regulation Z. See 88 FR 24393. The
methodology statement was revised to address the imminent
unavailability of certain data the CFPB previously relied on to
calculate average prime offer rates, as a result of a decision by
Freddie Mac to make changes to its Primary Mortgage Market
Survey[supreg] (PMMS). After evaluating potential sources, the CFPB
determined that data from Intercontinental Exchange Mortgage
Technology (ICE Mortgage Technology) is currently the most suitable
option to replace PMMS. Beginning on April 24, 2023, the CFPB
started using data provided by ICE Mortgage Technology and the
revised methodology to calculate average prime offer rates.
\2\ 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 CFPB shall calculate the minimum interest charge
thresholds annually using the CPI that was in effect on the preceding
June 1; the CFPB uses the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W) for this adjustment.\3\ 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 CFPB will increase the
minimum interest charge amounts set forth in the regulation by $1.00.
The CFPB bases its 2024 adjustment analysis on the CPI-W index in
effect on June 1, 2023, as reported by BLS on May 10, 2023.\4\ As a
result, the adjustment reflects the percentage change in the CPI-W from
April 2022 to April 2023. The adjustment analysis accounts for a 4.6
percent increase in the CPI-W from April 2022 to April 2023. 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 CFPB,
therefore, is not amending Sec. Sec. 1026.6(b)(2)(iii) and
1026.60(b)(3).
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\3\ The CPI-W is a subset of the Consumer Price Index for All
Urban Consumers (CPI-U) index and represents approximately 30
percent of the U.S. population.
\4\ BLS publishes Consumer Price Indices monthly, usually in the
middle of each calendar month. Thus, the CPI-W reported on May 10,
2023, was the most current as of June 1, 2023.
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[[Page 65114]]
B. HOEPA Annual Threshold Adjustments
Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431
of the Dodd-Frank Act,\5\ 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 CFPB
recalculate this threshold amount annually using the CPI index in
effect on the preceding June 1; the CFPB uses the CPI-U for this
adjustment.\6\ The CFPB bases the 2024 adjustment on the CPI-U index in
effect on June 1, 2023, as reported by BLS on May 10, 2023. As a
result, the adjustment reflects the percentage change in the CPI-U from
April 2022 to April 2023, which is an increase of 4.9 percent. The
adjustment to $26,092 here reflects the 4.9 percent increase in the
CPI-U index from April 2022 to April 2023 rounded to the nearest whole
dollar amount for ease of compliance.
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\5\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376 (2010).
\6\ 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 CFPB will
recalculate the dollar amount threshold annually using the CPI index in
effect on the preceding June 1; the CFPB uses the CPI-U for this
adjustment. The CFPB bases the 2024 adjustment on the CPI-U index in
effect on June 1, 2023, as reported by BLS on May 10, 2023. As a
result, the adjustment reflects the percentage change in CPI-U from
April 2022 to April 2023, which is an increase of 4.9 percent. The
adjustment to $1,305 here reflects the 4.9 percent increase in the CPI-
U index from April 2022 to April 2023 rounded to the nearest whole
dollar amount for ease of compliance.
C. QM Annual Threshold Adjustments
The CFPB'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 CFPB issued a final rule amending the
General QM loan definition in Sec. 1026.43(e)(2).\7\ 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 percentage points for a subordinate-lien covered
transaction with a loan amount less than $66,156 (indexed for
inflation).\8\ The rule states that the CFPB 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.\9\
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\7\ 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 CFPB 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).
\8\ The loan amounts in the regulatory text reflect the CPI-U in
effect on June 1, 2020.
\9\ 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 CFPB 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 CFPB bases the 2024 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, 2023, as reported by BLS on May 10, 2023. As a
result, the adjustment reflects the percentage change in CPI-U from
April 2022 to April 2023, which is an increase of 4.9 percent. The 2024
adjustment \10\ adopted here reflects a 4.9 percent increase in the
CPI-U index for this period rounded to whole dollars for ease of
compliance.
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\10\ For 2024, 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 $130,461; 3.5 or more percentage points for a first-lien
covered transaction with a loan amount greater than or equal to
$78,277 but less than $130,461; 6.5 or more percentage points for a
first-lien covered transaction with a loan amount less than $78,277;
6.5 or more percentage points for a first-lien covered transaction
secured by a manufactured home with a loan amount less than
$130,461; 3.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount greater than or equal to
$78,277; or 6.5 or more percentage points for a subordinate-lien
covered transaction with a loan amount less than $78,277.
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
$130,461; $3,914 for a loan amount greater than or equal to $78,277
but less than $130,461; 5 percent of the total loan amount for loans
greater than or equal to $26,092 but less than $78,277; $1,305 for a
loan amount greater than or equal to $16,308 but less than $26,092;
or 8 percent of the total loan amount for loans less than $16,308.
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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
[[Page 65115]]
$1.00 for the year 2024. Accordingly, the CFPB is not amending these
sections of Regulation Z.
B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3
Effective January 1, 2024, 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 $26,092, and the adjusted points-and-fees dollar trigger under Sec.
1026.32(a)(1)(ii)(B) is $1,305. If the total loan amount for a
transaction is $26,092 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
$26,092, and the points-and-fees amount exceeds the lesser of the
adjusted points-and-fees dollar trigger of $1,305 or 8 percent of the
total loan amount, the transaction is a high-cost mortgage. The CFPB is
amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments for
each year, to reflect for 2024 the new points-and-fees dollar trigger
and the new loan amount dollar threshold, respectively.
C. Qualified Mortgages Annual Threshold Adjustments
Effective January 1, 2024, 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 $130,461; 3.5 or more percentage points
for a first-lien covered transaction with a loan amount greater than or
equal to $78,277 but less than $130,461; 6.5 or more percentage points
for a first-lien covered transaction with a loan amount less than
$78,277; 6.5 or more percentage points for a first-lien covered
transaction secured by a manufactured home with a loan amount less than
$130,461; 3.5 or more percentage points for a subordinate-lien covered
transaction with a loan amount greater than or equal to $78,277; or 6.5
or more percentage points for a subordinate-lien covered transaction
with a loan amount less than $78,277. Accordingly, the CFPB 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, 2024, 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 $130,461; $3,914 for a loan amount
greater than or equal to $78,277 but less than $130,461; 5 percent of
the total loan amount for loans greater than or equal to $26,092 but
less than $78,277; $1,305 for a loan amount greater than or equal to
$16,308 but less than $26,092; or 8 percent of the total loan amount
for loans less than $16,308. The CFPB is amending comment 43(e)(3)(ii)-
1, which lists the adjustments for each year, to reflect the new dollar
threshold amounts for 2024.
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.\11\ Pursuant to this final rule, the CFPB 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 CFPB 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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\11\ 5 U.S.C. 553(b)(B).
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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.\12\ As
noted previously, the CFPB 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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\12\ 5 U.S.C. 603(a), 604(a).
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C. Paperwork Reduction Act
The information collections contained in Regulation Z which
implements TILA are approved by OMB under Control number 3170-0015. The
current approval for this control number expires on May 31st, 2026. In
accordance with the Paperwork Reduction Act of 1995,\13\ the CFPB
reviewed this final rule. The CFPB has determined that this rule does
not create any new information collections or substantially revise any
existing collections.
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\13\ 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 CFPB 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).
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 CFPB 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 Paragraph 43(e)(2)(vi) and Paragraph 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
[[Page 65116]]
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.
x. For 2024, $1,305, reflecting a 4.9 percent increase in the
CPI-U from June 2022 to June 2023, 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 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.
x. For 2024, $26,092, reflecting a 4.9 percent increase in the
CPI-U from June 2022 to June 2023, 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
[[Page 65117]]
$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.
iii. For 2024, reflecting a 4.9 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 $130,461, 2.25 or more percentage points;
B. For a first-lien covered transaction with a loan amount
greater than or equal to $78,277 but less than $130,461, 3.5 or more
percentage points;
C. For a first-lien covered transaction with a loan amount less
than $78,277, 6.5 or more percentage points;
D. For a first-lien covered transaction secured by a
manufactured home with a loan amount less than $130,461, 6.5 or more
percentage points;
E. For a subordinate-lien covered transaction with a loan amount
greater than or equal to $78,277, 3.5 or more percentage points;
F. For a subordinate-lien covered transaction with a loan amount
less than $78,277, 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 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;
[[Page 65118]]
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.
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.
x. For 2024, reflecting a 4.9 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 $130,461: 3
percent of the total loan amount;
B. For a loan amount greater than or equal to $78,277 but less
than $130,461: $3,914;
C. For a loan amount greater than or equal to $26,092 but less
than $78,277: 5 percent of the total loan amount;
D. For a loan amount greater than or equal to $16,308 but less
than $26,092: $1,305;
E. For a loan amount less than $16,308: 8 percent of the total
loan amount.
* * * * *
Brian Shearer,
Senior Advisor, Consumer Financial Protection Bureau.
[FR Doc. 2023-20476 Filed 9-20-23; 8:45 am]
BILLING CODE 4810-AM-P