The Consumer Financial Protection Bureau (“CFPB”) is required to calculate annually the dollar amounts for several provisions in Regulation Z. The CFPB recently issued a final rule amending 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 CFR § 1026.43((e)(3)(i)) based on the annual percentage change provided in the Consumer Price Index (CPI-U) in effect on June 1, 2022.
The threshold adjustments will be effective January 1, 2023.
HOEPA Points and Fees Thresholds
The adjusted HOEPA points-and-fees dollar trigger for high-cost mortgages in 2023 will increase from $1,148 to $1,243. Additionally, the total loan amount threshold used to determine whether a loan is subject to the “total points and fees” provision of HOEPA, or Section 32 will increase from $22,969 for 2022 to $24,866 for 2023.
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 memorandum regarding HOEPA determination, please see Section 32 High Cost Calculation.
Qualified Mortgage Points and Fees Thresholds
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 CFR § 1026.43(e)(3)(i)).
|
2022 |
2023 |
||
|
Loan Amount |
Limitation |
Loan Amount |
Limitation |
|
Greater than or equal to $114,847 |
3% of total loan amount |
Greater than or equal to $124,331 |
3% of total loan amount |
|
Greater than or equal to $68,908, but less than $114,847 |
$3,445 |
Greater than or equal to $74,599, but less than $124,331 |
$3,730 |
|
Greater than or equal to $22,969, but less than $68,908 |
5% of total loan amount |
Greater than or equal to $24,866, but less than $74,599 |
5% of total loan amount |
|
Greater than or equal to $14,356, but less than $22,969 |
$1,148 |
Greater than or equal to $15,541, but less than $24,866 |
$1,243 |
|
Less than $14,356 |
8% of total loan amount |
Less than $15,541 |
8% of total loan amount |
Qualified Mortgage Price-Based Limit Categories
Additionally, the CFPB has made updates to the thresholds applicable for the General QM Price-Based Limit. The top loan amount category for a first-lien loan secured by a non-manufactured home will increase to $124,331 from $110,260, using a 2.25% threshold:
|
Loan Amount 2022 |
Loan Amount 2023 |
Price Limitation |
||
|
First-Lien Non-MH |
First-Lien MH |
Subordinate Lien |
||
|
Greater than or equal to $110,260 |
Greater than or equal to $124,331 |
2.25% + APOR |
2.25% + APOR |
3.5% + APOR |
|
Less than $110,260 but greater than or equal to $66,156 |
Less than $124,331 but greater than or equal to $74,599 |
3.5% + APOR |
6.5% + APOR |
|
|
Less than $66,156 |
Less than $74,599 |
6.5% + APOR |
6.5% + APOR |
|
