Based on the 8.9% increase in the Consumer Price Index (CPI-W) in effect on June 1, 2022, the Consumer Financial Protection Bureau (CFPB) released a number of new thresholds which go into effect on January 1, 2023. They include:
- The minimum interest charge disclosure threshold of $1.00 under the CARD Act will remain unchanged. (1026.6(b)(2)(iii) and 1026.60(b)(3))
- There was no mention in the Federal Register of adjusting the dollar amount for the penalty fees safe harbor under the CARD Act from $30 and $40 for each subsequent violation within the following six months. (1026.52(b)(1)(ii)) There was no mention likely because the CFPB is in the process of evaluating “junk fees” for all areas.
Additionally, these changes affected the HOEPA threshold amounts found under 1026.32 based on the 8.3% increase in the Consumer Price Index (CPI-U) in effect on June 1, 2022.
- For HOEPA loans, the adjusted total loan amount threshold is $24,866, up from $22,969 in 2022. (1026.32(a)(1)(ii)(A))
- The adjusted statutory fee trigger for HOPEA loans is $1,243, up from $1,148 in 2022. (1026.32(a)(1)(ii)(B))
The Qualified Mortgage (1026.43(e)(3)) rules have revised thresholds as well. For the purpose of the creditor’s determination of a consumer’s ability to repay a transaction secured by a dwelling, a covered transaction is not a qualified mortgage unless the transaction’s total points and fees do not exceed:
- 3 percent of the total loan amount for a loan greater than or equal to $124,331 (up from $114,847);
- $3,730 (up from $3,445) for a loan amount greater than or equal to $74,599 (up from $68,908) but less than $124,331.
- 5 percent of the total loan amount for a loan greater than or equal to $24,866 (up from $22,969) but less than $74,599.
- $1,243 for a loan amount greater than or equal to $15,541 (up from $14,356) but less than $24,866.
- 8 percent of the total loan amount for a loan amount less than $15,541.
Mandatory in October 2022 were the new percentage thresholds for Qualified Mortgages under the General QM definition (1026.43(e)(2)(vi)). (The spread between the APR and APOR replaced the 43% DTI Appendix Q requirement) The spread cannot exceed the percentages below and be considered General QM. The thresholds for 2023 are:
- 25 or more percentage points for a first lien covered transaction with a loan amount greater than or equal to $124,331.
- 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.
- 5 or more percentage points for a first lien covered transaction with a loan amount less than $74,599.
- 5 or more percentage points for a first lien covered transaction secured by a manufactured home with a loan amount less than $124,331.
- 5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or
- 5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.
All the thresholds shown above are effective starting on January 1, 2023. You can find the Federal Register announcement here.
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