Revised Dollar Amount and Thresholds Under Federal High-Cost and Qualified Mortgage Provisions
The Consumer Financial Protection Bureau (“CFPB”) issued a final rule amending the high-cost mortgage thresholds and the qualified mortgage thresholds in Regulation Z. The amendments are effective January 1, 2022.
HOEPA/High-Cost Mortgage Threshold
Under Regulation Z, certain loans with points and fees exceeding specified thresholds are considered “high-cost mortgages.” The thresholds are (1) five percent (5%) if the loan amount is $22,969 or more; and (2) the lesser of eight percent (8%) or $1,148 if the loan amount is less than $22,969. The $22,969 and $1,148 figures are adjusted annually on January 1st based on changes in the consumer price index.
Effective January 1, 2022, the $22,052 figure is adjusted to $22,969 and the $1,103 figure is adjusted
to $1,148.
Ability to Repay/Qualified Mortgage Threshold
Regulation Z also provides that a loan is a “qualified mortgage” if, among other requirements, the total points and fees do not exceed certain thresholds. The points and fees thresholds for the “qualified mortgage” rule are also subject to annual adjustment based on inflation.
Effective January 1, 2022, a transaction is not a qualified mortgage unless the total points and fees do not exceed:
• 3% of the total loan amount for a loan amount greater than or equal to $114,847;
• $3,445 for a loan amount greater than or equal to $68,908, but less than $114,847;
• 5% of the total loan amount for a loan greater than or equal to $22,969, but less than $68,908;
• $1,148 for a loan amount greater than or equal to $14,356, but less than $22,969; and
• 8% of the total loan amount for a loan amount less than $14,356.