Regulation Z requires the CFPB to make annual adjustments to the dollar amount thresholds under the HOEPA "points and fees" provisions of Regulation Z (12 CFR 1026.32)(a)(1)(ii)), referred to as “Section 32” by the industry, and the qualified mortgage "points and fees" provisions under Regulation Z (12 C.F.R. § 1026.43(e)(3)(ii)) based on changes in the Consumer Price Index for All Urban Consumers (CPI-U).
HOEPA Points and Fees Thresholds
The Consumer Financial Protection Bureau (CFPB) issued a final rule, effective on January 1, 2020, providing that the dollar amount of the HOEPA fee-based trigger will increase by 2 percent from $1077 to $1099. Additionally, the total loan amount threshold used to determine whether a loan is subject to the "total points and fees" provisions of HOEPA, or Section 32 will increase by 2 percent to $21,980.
The fee-based trigger is used to determine whether the total points and fees payable by the consumer at or before loan closing subjects that loan to Section 32. Section 32 applies, in part, to certain loans if the total points and fees payable by the consumer at or before loan closing exceed the greater of eight percent (8%) of the total loan amount or a dollar amount threshold.
In addition to the Federal Section 32 test, this annual adjustment applies to the following state high cost tests: Colorado, Illinois, Maryland, Massachusetts, Oklahoma, Pennsylvania, Texas, and Utah. Please click here for more information.
To see DocMagic’s updated memorandum regarding the HOEPA determination, please see Section 32 High Cost Calculation.
Qualified Mortgage Points and Fees Thresholds
In addition, the final rule updates the dollar amount thresholds for determining whether a loan is a qualified mortgage (“QM”) under the “points and fees” provision specified in Regulation Z (12 C.F.R. § 1026.43(e)(3)(ii)) as follows:
|
2019 |
2020 |
||
|
Loan Amount |
Limitation |
Loan Amount |
Limitation |
|
Greater than or equal to $107,747 |
3% of total loan amount |
Greater than or equal to $109,898 |
3% of total loan amount |
|
Greater than or equal to $64,648, but less than $107,747 |
$3,232 |
Greater than or equal to $65,939, but less than $109,898 |
$3,297 |
|
Greater than or equal to $21,549, but less than $64,648 |
5% of total loan amount |
Greater than or equal to $21,980, but less than $65,939 |
5% of total loan amount |
|
Greater than or equal to $13,468, but less than $21,549 |
$1,077 |
Greater than or equal to $13,737, but less than $21,980 |
$1,099 |
|
Less than $13,468 |
8% of total loan amount |
Less than $13,737 |
8% of total loan amount |
