The League – Fostering Financial Wellbeing for All

CFPB updates 2024 dollar amounts for credit card minimal interest disclosures, HOEPA triggers, and QM limits

News Compliance Courier

Written by

in

NEWS:  The Consumer Financial Protection Bureau (CFPB) has released its annual updates to three threshold dollar figures that are important for credit unions with credit card and mortgage loan programs. The new figures go into effect Jan. 1, 2024. Please see the final rule for details.    

CARD Act

During 2010, a number of Reg. Z rules took effect under the Credit Card Accountability, Responsibility, and Disclosure Act (the CARD Act). The League’s Guide to the Feb. 22 Reg. Z Changes summarized significant CARD Act changes that went into effect in February 2010.

Among other things, the rules require the CFPB to calculate annual adjustments of the minimum interest charge threshold that triggers disclosure of the minimum interest charge in credit card applications, solicitations, and account opening disclosures. Its calculations did not result in a change for 2024 to the current minimum interest charge threshold (which requires disclosure of any minimum interest charge above $1.00).

HOEPA triggers  

As explained in The League’s ii Release No. B062, certain “high-cost” mortgage loans are subject to the Home Ownership and Equity Protection Act (HOEPA) rules in Reg. Z. Whether a mortgage loan is “high-cost” depends on three separate tests, based on the loan’s annual percentage rate, its points and fees, and the prepayment penalties that may be charged.

The CFPB has now increased the thresholds used in the points-and-fees test.

In 2024, a loan will be a high-cost mortgage if its points and fees exceed either of the following thresholds: 

  • 5% of the total loan amount for a loan amount greater than or equal to $26,092; or 
  • 8% of the total loan amount or $1,305 (whichever is less) for a loan amount less than $26,092. 

Qualified mortgage points-and-fees caps

As explained in The League’s ii Release No. B074, certain mortgage loans are presumed to comply with the ability-to-repay rules if they are “qualified mortgages” (QMs).

The rule sets pricing thresholds based on the spread of a loan’s annual percentage rate (APR) compared to the average prime offer rate (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 certain other requirements. In 2024, for QMs under the General QM loan definition, the thresholds for the spread between the APR and APOR 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.
In addition, a mortgage cannot be a QM if its points and fees are beyond certain thresholds. In 2024, for all categories of QMs, the thresholds for total points and fees will be:
  • 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.

More posts