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[Federal Register Volume 89, Number 231 (Monday, December 2, 2024)]
[Rules and Regulations]
[Pages 95080-95086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27553]

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CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Part 1026

Truth in Lending (Regulation Z) Annual Threshold Adjustments 
(Credit Cards, HOEPA, and Qualified Mortgages)

AGENCY: Consumer Financial Protection Bureau.

ACTION: Final rule; official interpretation.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is 
issuing this final rule amending the regulation text and official 
interpretations for Regulation Z, which implements the Truth in Lending 
Act (TILA). The CFPB calculates the dollar amounts for provisions in 
Regulation Z annually; this final rule revises the amounts for 
provisions implementing TILA and its amendments, including the Home 
Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The 
CFPB adjusts these amounts based on the annual percentage change of the 
Consumer Price Index (CPI) effective June 1, 2024.

DATES: This final rule is effective January 1, 2025.

FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory 
Implementation & Guidance Program Analyst, Office of Regulations, at 
202-435-7700 or at: https://reginquiries.consumerfinance.gov/. If you 
require this document in an alternative electronic format, please 
contact [email protected].

SUPPLEMENTARY INFORMATION: The CFPB is amending the regulation text and 
official interpretations for Regulation Z, which implements TILA, to 
update the dollar amounts of various thresholds that it must adjust 
annually to reflect the annual percentage change in the CPI as 
published by the Bureau of Labor Statistics (BLS). Specifically, for 
open-end consumer credit plans under TILA, the threshold that triggers 
requirements to disclose minimum interest charges will remain unchanged 
at $1.00 in 2025. For HOEPA loans, the adjusted total loan amount 
threshold for high-cost mortgages in 2025 will be $26,968. The adjusted 
points-and-fees dollar trigger for high-cost mortgages in 2025 will be 
$1,348. For qualified mortgages (QMs) under the General QM loan 
definition in Sec.  1026.43(e)(2), the thresholds for the spread 
between the annual percentage rate (APR) and the average prime offer 
rate (APOR) \1\ in 2025 will be: 2.25 or more percentage points for a 
first-lien covered transaction with a loan amount greater than or equal 
to $134,841; 3.5 or more percentage points for a first-lien covered 
transaction with a loan amount greater than or equal to $80,905 but 
less than $134,841; 6.5 or more percentage points for a first-lien 
covered transaction with a loan amount less than $80,905; 6.5 or more 
percentage points for a first-lien covered transaction secured by a 
manufactured home with a loan amount less than $134,841; 3.5 or more 
percentage points for a subordinate-lien covered transaction with a 
loan amount greater than or equal to $80,905; or 6.5 or more percentage 
points for a subordinate-lien covered transaction with a loan amount 
less than $80,905. For all categories of QMs, the thresholds for total 
points and fees in 2025 will be 3 percent of the total loan amount for 
a loan greater than or equal to $134,841; $4,045 for a loan amount 
greater than or equal to $80,905 but less than $134,841; 5 percent of 
the total loan amount for a loan greater than or equal to $26,968 but 
less than $80,905; $1,348 for a loan amount greater than or equal to 
$16,855 but less than $26,968; and 8 percent of the total loan amount 
for a loan amount less than $16,855.\2\
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    \1\ On April 20, 2023, the CFPB published a document announcing 
the availability of a revised version of its ``Methodology for 
Determining Average Prime Offer Rates,'' which describes the data 
and methodology used to calculate the average prime offer rate for 
purposes of Regulation C and Regulation Z. See 88 FR 24393. The 
methodology statement was revised to address the imminent 
unavailability of certain data the CFPB previously relied on to 
calculate average prime offer rates, as a result of a decision by 
Freddie Mac to make changes to its Primary Mortgage Market 
Survey[supreg] (PMMS). After evaluating potential sources, the CFPB 
determined that data from Intercontinental Exchange Mortgage 
Technology (ICE Mortgage Technology) is currently the most suitable 
option to replace PMMS. Beginning on April 24, 2023, the CFPB 
started using data provided by ICE Mortgage Technology and the 
revised methodology to calculate average prime offer rates.
    \2\ The QM categories in Regulation Z appear at 12 CFR 
1026.43(e)(2), (e)(4), (e)(5), (e)(6), and (e)(7). Note that 12 CFR 
1026.43(e)(6) applies only to covered transactions for which the 
application was received before April 1, 2016.

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[[Page 95081]]

I. Background

A. Credit Card Annual Adjustments

Minimum Interest Charge Disclosure Thresholds
    Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z 
implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections 
1026.6(b)(2)(iii) and 1026.60(b)(3) require creditors to disclose any 
minimum interest charge exceeding $1.00 that could be imposed during a 
billing cycle. These provisions also state that, for open-end consumer 
credit plans, the CFPB shall calculate the minimum interest charge 
thresholds annually using the CPI that was in effect on the preceding 
June 1; the CFPB uses the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W) for this adjustment.\3\ If the cumulative 
change in the adjusted minimum value derived from applying the annual 
CPI-W level to the current amounts in Sec. Sec.  1026.6(b)(2)(iii) and 
1026.60(b)(3) has risen by a whole dollar, the CFPB will increase the 
minimum interest charge amounts set forth in the regulation by $1.00. 
The CFPB bases its 2025 adjustment analysis on the CPI-W index in 
effect on June 1, 2024, as reported by BLS on May 15, 2024.\4\ As a 
result, the adjustment reflects the percentage change in the CPI-W from 
April 2023 to April 2024. The adjustment analysis accounts for a 3.4 
percent increase in the CPI-W from April 2023 to April 2024. This 
increase in the CPI-W when applied to the current amounts in Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3) does not trigger an increase in the 
minimum interest charge threshold of at least $1.00, and the CFPB, 
therefore, is not amending Sec. Sec.  1026.6(b)(2)(iii) and 
1026.60(b)(3).
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    \3\ The CPI-W is a subset of the Consumer Price Index for All 
Urban Consumers (CPI-U) index and represents approximately 30 
percent of the U.S. population.
    \4\ BLS publishes Consumer Price Indices monthly, usually in the 
middle of each calendar month. Thus, the CPI-W reported on May 15, 
2024, was the most current as of June 1, 2024.
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B. HOEPA Annual Threshold Adjustments

    Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431 
of the Dodd-Frank Act,\5\ which amended the HOEPA points-and-fees 
coverage test. Under Sec.  1026.32(a)(1)(ii)(A) and (B), in assessing 
whether a transaction is a high-cost mortgage due to points and fees 
the creditor is charging, the applicable points-and-fees coverage test 
depends on whether the total loan amount is for $20,000 or more, or for 
less than $20,000. Section 1026.32(a)(1)(ii) provides that the CFPB 
recalculate this threshold amount annually using the CPI index in 
effect on the preceding June 1; the CFPB uses the CPI-U for this 
adjustment.\6\ The CFPB bases the 2025 adjustment on the CPI-U index in 
effect on June 1, 2024, as reported by BLS on May 15, 2024. As a 
result, the adjustment reflects the percentage change in the CPI-U from 
April 2023 to April 2024, which is an increase of 3.4 percent. The 
adjustment to $26,968 here reflects the 3.4 percent increase in the 
CPI-U index from April 2023 to April 2024 rounded to the nearest whole 
dollar amount for ease of compliance.\7\
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    \5\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010).
    \6\ The CPI-U is based on all urban consumers and represents 
approximately 93 percent of the U.S. population.
    \7\ Adjusted dollar amounts throughout this final rule are 
calculated by applying the relevant consumer price index to the 
previous year's unrounded dollar amount before rounding to the 
nearest whole dollar. Accordingly, applying the rounded consumer 
price index figures to the previous year's rounded dollar amounts 
may not add up to the total dollar amount shown.
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    Under Sec.  1026.32(a)(1)(ii)(B), the HOEPA points-and-fees 
threshold is the lesser of 8 percent of the total loan amount or 
$1,000. Section 1026.32(a)(1)(ii)(B) provides that the CFPB will 
recalculate the dollar amount threshold annually using the CPI index in 
effect on the preceding June 1; the CFPB uses the CPI-U for this 
adjustment. The CFPB bases the 2025 adjustment on the CPI-U index in 
effect on June 1, 2024, as reported by BLS on May 15, 2024. As a 
result, the adjustment reflects the percentage change in CPI-U from 
April 2023 to April 2024, which is an increase of 3.4 percent. The 
adjustment to $1,348 here reflects the 3.4 percent increase in the CPI-
U index from April 2022 to April 2023 rounded to the nearest whole 
dollar amount for ease of compliance.

C. QM Annual Threshold Adjustments

    The CFPB's Regulation Z implements sections 1411 and 1412 of the 
Dodd-Frank Act, which generally require creditors to make a reasonable, 
good-faith determination of a consumer's ability to repay any consumer 
credit transaction secured by a dwelling and establishes certain 
protections from liability under this requirement for QMs.
    On December 10, 2020, the CFPB issued a final rule amending the 
General QM loan definition in Sec.  1026.43(e)(2).\8\ The final rule 
established pricing thresholds in Sec.  1026.43(e)(2)(vi)(A) through 
(F) based on the spread of a loan's APR compared to the 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 other requirements in 
Sec.  1026.43(e)(2). Specifically, under Sec.  1026.43(e)(2)(vi), a 
covered transaction is a QM if the APR does not exceed the APOR for a 
comparable transaction as of the date the interest rate is set by: 2.25 
or more percentage points for a first-lien covered transaction with a 
loan amount greater than or equal to $110,260 (indexed for inflation); 
3.5 or more percentage points for a first-lien covered transaction with 
a loan amount greater than or equal to $66,156 (indexed for inflation) 
but less than $110,260 (indexed for inflation); 6.5 or more percentage 
points for a first-lien covered transaction with a loan amount less 
than $66,156 (indexed for inflation); 6.5 or more percentage points for 
a first-lien covered transaction secured by a manufactured home with a 
loan amount less than $110,260 (indexed for inflation); 3.5 or more 
percentage points for a subordinate-lien covered transaction with a 
loan amount greater than or equal to $66,156 (indexed for inflation); 
or 6.5 or more percentage points for a subordinate-lien covered 
transaction with a loan amount less than $66,156 (indexed for 
inflation).\9\ The rule states that the CFPB will adjust the loan 
amounts in Sec.  1026.43(e)(2)(vi) annually on January 1 by the annual 
percentage change in the CPI-U that was in effect on the preceding June 
1.\10\
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    \8\ 85 FR 86308 (Dec. 29, 2020). This final rule was initially 
effective on March 1, 2021, with a mandatory compliance date of July 
1, 2021. On April 27, 2021, the CFPB issued a final rule effective 
June 30, 2021, which extended the mandatory compliance date of the 
final rule published on December 29, 2020, at 85 FR 86308, until 
October 1, 2022. 86 FR 22844 (Apr. 30, 2021).
    \9\ The loan amounts in the regulatory text reflect the CPI-U in 
effect on June 1, 2020.
    \10\ See comment 43(e)(2)(vi)-3.
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    Regulation Z also contains points and fees limits applicable to all 
categories of QMs. Under Sec.  1026.43(e)(3)(i), a covered transaction 
is not a QM if the transaction's total points and fees exceed: 3 
percent of the total loan amount for a loan amount greater than or 
equal to $100,000 (indexed for inflation); $3,000 (indexed for 
inflation) for a loan amount greater than or equal to $60,000 (indexed 
for inflation) but less than $100,000 (indexed for inflation); 5 
percent of the total loan amount for loans greater than or equal to 
$20,000 (indexed for inflation) but less than $60,000 (indexed for 
inflation); $1,000 (indexed for inflation) for a loan amount greater 
than or equal to $12,500

[[Page 95082]]

(indexed for inflation) but less than $20,000 (indexed for inflation); 
or 8 percent of the total loan amount for loans less than $12,500 
(indexed for inflation). Section 1026.43(e)(3)(ii) provides that the 
CFPB will recalculate the limits and loan amounts in Sec.  
1026.43(e)(3)(i) annually for inflation using the CPI-U index in effect 
on the preceding June 1.
    The CFPB bases the 2025 adjustment to the loan amounts applicable 
to the pricing thresholds for the General QM loan definition and the 
points and fees limits for all categories of QM on the CPI-U index in 
effect on June 1, 2024, as reported by BLS on May 15, 2024. As a 
result, the adjustment reflects the percentage change in CPI-U from 
April 2023 to April 2024, which is an increase of 3.4 percent. The 2025 
adjustment \11\ adopted here reflects a 3.4 percent increase in the 
CPI-U index for this period rounded to whole dollars for ease of 
compliance.
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    \11\ For 2025, a covered transaction is a qualified mortgage if 
the APR does not exceed the APOR for a comparable transaction as of 
the date the interest rate is set by: 2.25 or more percentage points 
for a first-lien covered transaction with a loan amount greater than 
or equal to $134,841; 3.5 or more percentage points for a first-lien 
covered transaction with a loan amount greater than or equal to 
$80,905 but less than $134,841; 6.5 or more percentage points for a 
first-lien covered transaction with a loan amount less than $80,905; 
6.5 or more percentage points for a first-lien covered transaction 
secured by a manufactured home with a loan amount less than 
$134,841; 3.5 or more percentage points for a subordinate-lien 
covered transaction with a loan amount greater than or equal to 
$80,905; or 6.5 or more percentage points for a subordinate-lien 
covered transaction with a loan amount less than $80,905. 
Additionally, a covered transaction is not a qualified mortgage if 
the transaction's total points and fees exceed 3 percent of the 
total loan amount for a loan amount greater than or equal to 
$134,841; $4,045 for a loan amount greater than or equal to $80,905 
but less than $134,841; 5 percent of the total loan amount for loans 
greater than or equal to $26,968 but less than $80,905; $1,348 for a 
loan amount greater than or equal to $16,855 but less than $26,968; 
or 8 percent of the total loan amount for loans less than $16,855.
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II. Adjustment and Commentary Revision

A. Credit Card Annual Adjustments Minimum Interest Charge Disclosure 
Thresholds--Sec. Sec.  1026.6(b)(2)(iii) and 1026.60(b)(3)

    The minimum interest charge amounts for Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for 
the year 2025. Accordingly, the CFPB is not amending these sections of 
Regulation Z.

B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3

    Effective January 1, 2025, for purposes of determining under Sec.  
1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to 
which a transaction is subject, the total loan amount threshold figure 
is $26,968, and the adjusted points-and-fees dollar trigger under Sec.  
1026.32(a)(1)(ii)(B) is $1,348. If the total loan amount for a 
transaction is $26,968 or more, and the points-and-fees amount exceeds 
5 percent of the total loan amount, the transaction is a high-cost 
mortgage. If the total loan amount for a transaction is less than 
$26,968, and the points-and-fees amount exceeds the lesser of the 
adjusted points-and-fees dollar trigger of $1,348 or 8 percent of the 
total loan amount, the transaction is a high-cost mortgage. The CFPB is 
amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments for 
each year, to reflect for 2025 the new points-and-fees dollar trigger 
and the new loan amount dollar threshold, respectively.

C. Qualified Mortgages Annual Threshold Adjustments

    Effective January 1, 2025, to satisfy Sec.  1026.43(e)(2)(vi) under 
the General QM loan definition, the annual percentage rate may not 
exceed the average prime offer rate for a comparable transaction as of 
the date the interest rate is set by the following amounts: 2.25 or 
more percentage points for a first-lien covered transaction with a loan 
amount greater than or equal to $134,841; 3.5 or more percentage points 
for a first-lien covered transaction with a loan amount greater than or 
equal to $80,905 but less than $134,841; 6.5 or more percentage points 
for a first-lien covered transaction with a loan amount less than 
$80,905; 6.5 or more percentage points for a first-lien covered 
transaction secured by a manufactured home with a loan amount less than 
$134,841; 3.5 or more percentage points for a subordinate-lien covered 
transaction with a loan amount greater than or equal to $80,905; or 6.5 
or more percentage points for a subordinate-lien covered transaction 
with a loan amount less than $80,905. Accordingly, the CFPB is amending 
comment 43(e)(2)(vi)-3, which lists the adjustments for each year, to 
reflect the new dollar threshold amounts for Sec.  1026.43(e)(2)(vi)(A) 
through (F).
    Effective January 1, 2025, a covered transaction is not a qualified 
mortgage if, pursuant to Sec.  1026.43(e)(3), the transaction's total 
points and fees exceed 3 percent of the total loan amount for a loan 
amount greater than or equal to $134,841; $4,045 for a loan amount 
greater than or equal to $80,905 but less than $134,841; 5 percent of 
the total loan amount for loans greater than or equal to $26,968 but 
less than $80,905; $1,348 for a loan amount greater than or equal to 
$16,855 but less than $26,968; or 8 percent of the total loan amount 
for loans less than $16,855. The CFPB is amending comment 43(e)(3)(ii)-
1, which lists the adjustments for each year, to reflect the new dollar 
threshold amounts for 2025.

III. Procedural Requirements

A. Administrative Procedure Act

    The Administrative Procedure Act does not require notice and 
opportunity for public comment if an agency finds that notice and 
public comment are impracticable, unnecessary, or contrary to the 
public interest.\12\ Pursuant to this final rule, the CFPB adds 
comments 32(a)(1)(ii)-1.ix, 32(a)(1)(ii)-3.ix, 43(e)(2)(vi)-3.ii, and 
43(e)(3)(ii)-1.ix to update the exemption thresholds. The amendments in 
this final rule are technical and non-discretionary, as they merely 
apply the method previously established in Regulation Z for determining 
adjustments to the thresholds. For these reasons, the CFPB has 
determined that publishing a notice of proposed rulemaking and 
providing opportunity for public comment are unnecessary. The 
amendments, therefore, are adopted in final form.
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    \12\ 5 U.S.C. 553(b)(B).
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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\13\ As 
noted previously, the CFPB has determined that it is unnecessary to 
publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirement relating to an initial and final 
regulatory flexibility analysis do not apply.
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    \13\ 5 U.S.C. 603(a), 604(a).
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C. Paperwork Reduction Act

    The information collections contained in Regulation Z which 
implements TILA are approved by OMB under Control number 3170-0015. The 
current approval for this control number expires on May 31st, 2026. In 
accordance with the Paperwork Reduction Act of 1995,\14\ the CFPB 
reviewed this final rule. The CFPB has determined that this rule does 
not create any new information collections or substantially revise any 
existing collections.
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    \14\ 44 U.S.C. 3506; 5 CFR part 1320.
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D. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the CFPB will submit a report containing this rule and other required 
information to the United

[[Page 95083]]

States Senate, the United States House of Representatives, and the 
Comptroller General of the United States prior to the rule taking 
effect. The Office of Information and Regulatory Affairs (OIRA) has 
designated this rule as not a ``major rule'' as defined by 5 U.S.C. 
804(2).

List of Subjects in 12 CFR Part 1026

    Advertising, Banks, Banking, Consumer protection, Credit, Credit 
unions, Mortgages, National banks, Reporting and recordkeeping 
requirements, Savings associations, Truth-in-lending.

Authority and Issuance

    For the reasons set forth in the preamble, the CFPB amends 
Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 continues to read as follows:

    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.

0
2. In Supplement I to Part 1026:
0
a. Under Section 1026.32--Requirements for High-Cost Mortgages, revise 
paragraph 32(a)(1)(ii); and
0
b. Under Section 1026.43--Minimum Standards for Transactions Secured by 
a Dwelling, revise paragraphs 43(e)(2)(vi) and 43(e)(3)(ii).
    The revisions read as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Section 1026.32--Requirements for High-Cost Mortgages

* * * * *
* * * * *
    Paragraph 32(a)(1)(ii).
    1. Annual adjustment of $1,000 amount. The $1,000 figure in 
Sec.  1026.32(a)(1)(ii)(B) is adjusted annually on January 1 by the 
annual percentage change in the CPI that was in effect on the 
preceding June 1. The Bureau will publish adjustments after the June 
figures become available each year.
    i. For 2015, $1,020, reflecting a 2 percent increase in the CPI-
U from June 2013 to June 2014, rounded to the nearest whole dollar.
    ii. For 2016, $1,017, reflecting a 0.2 percent decrease in the 
CPI-U from June 2014 to June 2015, rounded to the nearest whole 
dollar.
    iii. For 2017, $1,029, reflecting a 1.1 percent increase in the 
CPI-U from June 2015 to June 2016, rounded to the nearest whole 
dollar.
    iv. For 2018, $1,052, reflecting a 2.2 percent increase in the 
CPI-U from June 2016 to June 2017, rounded to the nearest whole 
dollar.
    v. For 2019, $1,077, reflecting a 2.5 percent increase in the 
CPI-U from June 2017 to June 2018, rounded to the nearest whole 
dollar.
    vi. For 2020, $1,099, reflecting a 2 percent increase in the 
CPI-U from June 2018 to June 2019, rounded to the nearest whole 
dollar.
    vii. For 2021, $1,103, reflecting a 0.3 percent increase in the 
CPI-U from June 2019 to June 2020, rounded to the nearest whole 
dollar.
    viii. For 2022, $1,148, reflecting a 4.2 percent increase in the 
CPI-U from June 2020 to June 2021, rounded to the nearest whole 
dollar.
    ix. For 2023, $1,243, reflecting an 8.3 percent increase in the 
CPI-U from June 2021 to June 2022, rounded to the nearest whole 
dollar.
    x. For 2024, $1,305, reflecting a 4.9 percent increase in the 
CPI-U from June 2022 to June 2023, rounded to the nearest whole 
dollar.
    xi. For 2025, $1,348, reflecting a 3.4 percent increase in the 
CPI-U from June 2023 to June 2024, rounded to the nearest whole 
dollar.
    2. Historical adjustment of $400 amount. Prior to January 10, 
2014, a mortgage loan was covered by Sec.  1026.32 if the total 
points and fees payable by the consumer at or before loan 
consummation exceeded the greater of $400 or 8 percent of the total 
loan amount. The $400 figure was adjusted annually on January 1 by 
the annual percentage change in the CPI that was in effect on the 
preceding June 1, as follows:
    i. For 1996, $412, reflecting a 3 percent increase in the CPI-U 
from June 1994 to June 1995, rounded to the nearest whole dollar.
    ii. For 1997, $424, reflecting a 2.9 percent increase in the 
CPI-U from June 1995 to June 1996, rounded to the nearest whole 
dollar.
    iii. For 1998, $435, reflecting a 2.5 percent increase in the 
CPI-U from June 1996 to June 1997, rounded to the nearest whole 
dollar.
    iv. For 1999, $441, reflecting a 1.4 percent increase in the 
CPI-U from June 1997 to June 1998, rounded to the nearest whole 
dollar.
    v. For 2000, $451, reflecting a 2.3 percent increase in the CPI-
U from June 1998 to June 1999, rounded to the nearest whole dollar.
    vi. For 2001, $465, reflecting a 3.1 percent increase in the 
CPI-U from June 1999 to June 2000, rounded to the nearest whole 
dollar.
    vii. For 2002, $480, reflecting a 3.27 percent increase in the 
CPI-U from June 2000 to June 2001, rounded to the nearest whole 
dollar.
    viii. For 2003, $488, reflecting a 1.64 percent increase in the 
CPI-U from June 2001 to June 2002, rounded to the nearest whole 
dollar.
    ix. For 2004, $499, reflecting a 2.22 percent increase in the 
CPI-U from June 2002 to June 2003, rounded to the nearest whole 
dollar.
    x. For 2005, $510, reflecting a 2.29 percent increase in the 
CPI-U from June 2003 to June 2004, rounded to the nearest whole 
dollar.
    xi. For 2006, $528, reflecting a 3.51 percent increase in the 
CPI-U from June 2004 to June 2005, rounded to the nearest whole 
dollar.
    xii. For 2007, $547, reflecting a 3.55 percent increase in the 
CPI-U from June 2005 to June 2006, rounded to the nearest whole 
dollar.
    xiii. For 2008, $561, reflecting a 2.56 percent increase in the 
CPI-U from June 2006 to June 2007, rounded to the nearest whole 
dollar.
    xiv. For 2009, $583, reflecting a 3.94 percent increase in the 
CPI-U from June 2007 to June 2008, rounded to the nearest whole 
dollar.
    xv. For 2010, $579, reflecting a 0.74 percent decrease in the 
CPI-U from June 2008 to June 2009, rounded to the nearest whole 
dollar.
    xvi. For 2011, $592, reflecting a 2.2 percent increase in the 
CPI-U from June 2009 to June 2010, rounded to the nearest whole 
dollar.
    xvii. For 2012, $611, reflecting a 3.2 percent increase in the 
CPI-U from June 2010 to June 2011, rounded to the nearest whole 
dollar.
    xviii. For 2013, $625, reflecting a 2.3 percent increase in the 
CPI-U from June 2011 to June 2012, rounded to the nearest whole 
dollar.
    xix. For 2014, $632, reflecting a 1.1 percent increase in the 
CPI-U from June 2012 to June 2013, rounded to the nearest whole 
dollar.
    3. Applicable threshold. For purposes of Sec.  
1026.32(a)(1)(ii), a creditor must determine the applicable points 
and fees threshold based on the face amount of the note (or, in the 
case of an open-end credit plan, the credit limit for the plan when 
the account is opened). However, the creditor must apply the 
allowable points and fees percentage to the ``total loan amount,'' 
as defined in Sec.  1026.32(b)(4). For closed-end credit 
transactions, the total loan amount may be different than the face 
amount of the note. The $20,000 amount in Sec.  1026.32(a)(1)(ii)(A) 
and (B) is adjusted annually on January 1 by the annual percentage 
change in the CPI that was in effect on the preceding June 1.
    i. For 2015, $20,391, reflecting a 2 percent increase in the 
CPI-U from June 2013 to June 2014, rounded to the nearest whole 
dollar.
    ii. For 2016, $20,350, reflecting a 0.2 percent decrease in the 
CPI-U from June 2014 to June 2015, rounded to the nearest whole 
dollar.
    iii. For 2017, $20,579, reflecting a 1.1 percent increase in the 
CPI-U from June 2015 to June 2016, rounded to the nearest whole 
dollar.
    iv. For 2018, $21,032, reflecting a 2.2 percent increase in the 
CPI-U from June 2016 to June 2017, rounded to the nearest whole 
dollar.
    v. For 2019, $21,549, reflecting a 2.5 percent increase in the 
CPI-U from June 2017 to June 2018, rounded to the nearest whole 
dollar.
    vi. For 2020, $21,980, reflecting a 2 percent increase in the 
CPI-U from June 2018 to June 2019, rounded to the nearest whole 
dollar.
    vii. For 2021, $22,052 reflecting a 0.3 percent increase in the 
CPI-U from June 2019 to June 2020, rounded to the nearest whole 
dollar.
    viii. For 2022, $22,969 reflecting a 4.2 percent increase in the 
CPI-U from June 2020 to June 2021, rounded to the nearest whole 
dollar.
    ix. For 2023, $24,866 reflecting an 8.3 percent increase in the 
CPI-U from June 2021 to June 2022, rounded to the nearest whole 
dollar.
    x. For 2024, $26,092, reflecting a 4.9 percent increase in the 
CPI-U from June 2022

[[Page 95084]]

to June 2023, rounded to the nearest whole dollar.
    xi. For 2025, $26,968, reflecting a 3.4 percent increase in the 
CPI-U from June 2023 to June 2024, rounded to the nearest whole 
dollar.
* * * * *

Section 1026.43--Minimum Standards for Transactions Secured by a 
Dwelling

* * * * *
    Paragraph 43(e)(2)(vi).
    1. Determining the average prime offer rate for a comparable 
transaction as of the date the interest rate is set. For guidance on 
determining the average prime offer rate for a comparable 
transaction as of the date the interest rate is set, see comments 
43(b)(4)-1 through -3.
    2. Determination of applicable threshold. A creditor must 
determine the applicable threshold by determining which category the 
loan falls into based on the face amount of the note (the ``loan 
amount'' as defined in Sec.  1026.43(b)(5)). For example, for a 
first-lien covered transaction with a loan amount of $75,000, the 
loan would fall into the tier for loans greater than or equal to 
$66,156 (indexed for inflation) but less than $110,260 (indexed for 
inflation), for which the applicable threshold is 3.5 or more 
percentage points.
    3. Annual adjustment for inflation. The dollar amounts in Sec.  
1026.43(e)(2)(vi) will be adjusted annually on January 1 by the 
annual percentage change in the CPI-U that was in effect on the 
preceding June 1. The Bureau will publish adjustments after the June 
figures become available each year.
    i. For 2022, reflecting a 4.2 percent increase in the CPI-U that 
was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate may not exceed the 
average prime offer rate for a comparable transaction as of the date 
the interest rate is set by the following amounts:
    A. For a first-lien covered transaction with a loan amount 
greater than or equal to $114,847, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount 
greater than or equal to $68,908 but less than $114,847, 3.5 or more 
percentage points;
    C. For a first-lien covered transaction with a loan amount less 
than $68,908, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a 
manufactured home with a loan amount less than $114,847, 6.5 or more 
percentage points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $68,908, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $68,908, 6.5 or more percentage points.
    ii. For 2023, reflecting an 8.3 percent increase in the CPI-U 
that was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate may not exceed the 
average prime offer rate for a comparable transaction as of the date 
the interest rate is set by the following amounts:
    A. For a first-lien covered transaction with a loan amount 
greater than or equal to $124,331, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount 
greater than or equal to $74,599 but less than $124,331, 3.5 or more 
percentage points;
    C. For a first-lien covered transaction with a loan amount less 
than $74,599, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a 
manufactured home with a loan amount less than $124,331, 6.5 or more 
percentage points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $74,599, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $74,599, 6.5 or more percentage points.
    iii. For 2024, reflecting a 4.9 percent increase in the CPI-U 
that was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate may not exceed the 
average prime offer rate for a comparable transaction as of the date 
the interest rate is set by the following amounts:
    A. For a first-lien covered transaction with a loan amount 
greater than or equal to $130,461, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount 
greater than or equal to $78,277 but less than $130,461, 3.5 or more 
percentage points;
    C. For a first-lien covered transaction with a loan amount less 
than $78,277, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a 
manufactured home with a loan amount less than $130,461, 6.5 or more 
percentage points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $78,277, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $78,277, 6.5 or more percentage points.
    iv. For 2025, reflecting a 3.4 percent increase in the CPI-U 
that was reported on the preceding June 1, to satisfy Sec.  
1026.43(e)(2)(vi), the annual percentage rate may not exceed the 
average prime offer rate for a comparable transaction as of the date 
the interest rate is set by the following amounts:
    A. For a first-lien covered transaction with a loan amount 
greater than or equal to $134,841, 2.25 or more percentage points;
    B. For a first-lien covered transaction with a loan amount 
greater than or equal to $80,905 but less than $134,841, 3.5 or more 
percentage points;
    C. For a first-lien covered transaction with a loan amount less 
than $80,905, 6.5 or more percentage points;
    D. For a first-lien covered transaction secured by a 
manufactured home with a loan amount less than $134,841, 6.5 or more 
percentage points;
    E. For a subordinate-lien covered transaction with a loan amount 
greater than or equal to $80,905, 3.5 or more percentage points;
    F. For a subordinate-lien covered transaction with a loan amount 
less than $80,905, 6.5 or more percentage points.
    4. Determining the annual percentage rate for certain loans for 
which the interest rate may or will change.
    i. In general. The commentary to Sec.  1026.17(c)(1) and other 
provisions in subpart C address how to determine the annual 
percentage rate disclosures for closed-end credit transactions. 
Provisions in Sec.  1026.32(a)(3) address how to determine the 
annual percentage rate to determine coverage under Sec.  
1026.32(a)(1)(i). Section 1026.43(e)(2)(vi) requires, for the 
purposes of Sec.  1026.43(e)(2)(vi), a different determination of 
the annual percentage rate for a qualified mortgage under Sec.  
1026.43(e)(2) for which the interest rate may or will change within 
the first five years after the date on which the first regular 
periodic payment will be due. An identical special rule for 
determining the annual percentage rate for such a loan also applies 
for purposes of Sec.  1026.43(b)(4).
    ii. Loans for which the interest rate may or will change. 
Section 1026.43(e)(2)(vi) includes a special rule for determining 
the annual percentage rate for a loan for which the interest rate 
may or will change within the first five years after the date on 
which the first regular periodic payment will be due. This rule 
applies to adjustable-rate mortgages that have a fixed-rate period 
of five years or less and to step-rate mortgages for which the 
interest rate changes within that five-year period.
    iii. Maximum interest rate during the first five years. For a 
loan for which the interest rate may or will change within the first 
five years after the date on which the first regular periodic 
payment will be due, a creditor must treat the maximum interest rate 
that could apply at any time during that five-year period as the 
interest rate for the full term of the loan to determine the annual 
percentage rate for purposes of Sec.  1026.43(e)(2)(vi), regardless 
of whether the maximum interest rate is reached at the first or 
subsequent adjustment during the five-year period. For additional 
instruction on how to determine the maximum interest rate during the 
first five years after the date on which the first regular periodic 
payment will be due, see comments 43(e)(2)(iv)-3 and -4.
    iv. Treatment of the maximum interest rate in determining the 
annual percentage rate. For a loan for which the interest rate may 
or will change within the first five years after the date on which 
the first regular periodic payment will be due, the creditor must 
determine the annual percentage rate for purposes of Sec.  
1026.43(e)(2)(vi) by treating the maximum interest rate that may 
apply within the first five years as the interest rate for the full 
term of the loan. For example, assume an adjustable-rate mortgage 
with a loan term of 30 years and an initial discounted rate of 5.0 
percent that is fixed for the first three years. Assume that the 
maximum interest rate during the first five years after the date on 
which the first regular periodic payment will be due is 7.0 percent. 
Pursuant to Sec.  1026.43(e)(2)(vi), the creditor must determine the 
annual percentage rate based on an interest rate of 7.0 percent 
applied for the full 30-year loan term.

[[Page 95085]]

    5. Meaning of a manufactured home. For purposes of Sec.  
1026.43(e)(2)(vi)(D), manufactured home means any residential 
structure as defined under regulations of the U.S. Department of 
Housing and Urban Development (HUD) establishing manufactured home 
construction and safety standards (24 CFR 3280.2). Modular or other 
factory-built homes that do not meet the HUD code standards are not 
manufactured homes for purposes of Sec.  1026.43(e)(2)(vi)(D).
    6. Scope of threshold for transactions secured by a manufactured 
home. The threshold in Sec.  1026.43(e)(2)(vi)(D) applies to first-
lien covered transactions less than $110,260 (indexed for inflation) 
that are secured by a manufactured home and land, or by a 
manufactured home only.
* * * * *
    Paragraph 43(e)(3)(ii).
    1. Annual adjustment for inflation. The dollar amounts, 
including the loan amounts, in Sec.  1026.43(e)(3)(i) will be 
adjusted annually on January 1 by the annual percentage change in 
the CPI-U that was in effect on the preceding June 1. The Bureau 
will publish adjustments after the June figures become available 
each year.
    i. For 2015, reflecting a 2 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transactions total points and fees do 
not exceed;
    A. For a loan amount greater than or equal to $101,953: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $61,172 but less 
than $101,953: $3,059;
    C. For a loan amount greater than or equal to $20,391 but less 
than $61,172: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,744 but less 
than $20,391; $1,020;
    E. For a loan amount less than $12,744: 8 percent of the total 
loan amount.
    ii. For 2016, reflecting a 0.2 percent decrease in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transactions total points and 
fees do not exceed;
    A. For a loan amount greater than or equal to $101,749: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $61,050 but less 
than $101,749: $3,052;
    C. For a loan amount greater than or equal to $20,350 but less 
than $61,050: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,719 but less 
than $20,350; $1,017;
    E. For a loan amount less than $12,719: 8 percent of the total 
loan amount.
    iii. For 2017, reflecting a 1.1 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transactions total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $102,894: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $61,737 but less 
than $102,894: $3,087;
    C. For a loan amount greater than or equal to $20,579 but less 
than $61,737: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,862 but less 
than $20,579: $1,029;
    E. For a loan amount less than $12,862: 8 percent of the total 
loan amount.
    iv. For 2018, reflecting a 2.2 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transaction's total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $105,158: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $63,095 but less 
than $105,158: $3,155;
    C. For a loan amount greater than or equal to $21,032 but less 
than $63,095: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,145 but less 
than $21,032: $1,052;
    E. For a loan amount less than $13,145: 8 percent of the total 
loan amount.
    v. For 2019, reflecting a 2.5 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $107,747: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $64,648 but less 
than $107,747: $3,232;
    C. For a loan amount greater than or equal to $21,549 but less 
than $64,648: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,468 but less 
than $21,549: $1,077;
    E. For a loan amount less than $13,468: 8 percent of the total 
loan amount.
    vi. For 2020, reflecting a 2 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $109,898: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $65,939 but less 
than $109,898: $3,297;
    C. For a loan amount greater than or equal to $21,980 but less 
than $65,939: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,737 but less 
than $21,980: $1,099;
    E. For a loan amount less than $13,737: 8 percent of the total 
loan amount.
    vii. For 2021, reflecting a 0.3 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transaction's total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $110,260: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $66,156 but less 
than $110,260: $3,308;
    C. For a loan amount greater than or equal to $22,052 but less 
than $66,156: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $13,783 but less 
than $22,052: $1,103;
    E. For a loan amount less than $13,783: 8 percent of the total 
loan amount.
    viii. For 2022, reflecting a 4.2 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transaction's total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $114,847: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $68,908 but less 
than $114,847: $3,445;
    C. For a loan amount greater than or equal to $22,969 but less 
than $68,908: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $14,356 but less 
than $22,969: $1,148;
    E. For a loan amount less than $14,356: 8 percent of the total 
loan amount.
    ix. For 2023, reflecting an 8.3 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transaction's total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $124,331: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $74,599 but less 
than $124,331: $3,730;
    C. For a loan amount greater than or equal to $24,866 but less 
than $74,599: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $15,541 but less 
than $24,866: $1,243;
    E. For a loan amount less than $15,541: 8 percent of the total 
loan amount.
    x. For 2024, reflecting a 4.9 percent increase in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed:
    A. For a loan amount greater than or equal to $130,461: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $78,277 but less 
than $130,461: $3,914;
    C. For a loan amount greater than or equal to $26,092 but less 
than $78,277: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $16,308 but less 
than $26,092: $1,305;
    E. For a loan amount less than $16,308: 8 percent of the total 
loan amount.
    xi. For 2025, reflecting a 3.4 percent increase in the CPI-U 
that was reported on the preceding June 1, a covered transaction is 
not a qualified mortgage unless the transaction's total points and 
fees do not exceed:
    A. For a loan amount greater than or equal to $134,841: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $80,905 but less 
than $134,841: $4,045;
    C. For a loan amount greater than or equal to $26,968 but less 
than $80,905: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $16,855 but less 
than $26,968: $1,348;

[[Page 95086]]

    E. For a loan amount less than $16,855: 8 percent of the total 
loan amount.
* * * * *

Brian Shearer,
Assistant Director, Office of Policy Planning and Strategy, Consumer 
Financial Protection Bureau.
[FR Doc. 2024-27553 Filed 11-29-24; 8:45 am]
BILLING CODE 4810-AM-P
```