Source: http://federal.elaws.us/fr/8/1/2019/2019-16300
Timestamp: 2019-12-14 21:16:49
Document Index: 90085820

Matched Legal Cases: ['§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', 'art 1320']

2019-16300. Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages), Federal Register
Home » 2019 Issues » 84 FR (08/01/2019) » 2019-16300. Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)
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Kristen Phinnessee, Counsel, Office of Regulations, at (202) 435-7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.
The Bureau is amending the regulation text and official interpretations for Regulation Z, which implements TILA, to update the dollar amounts of various thresholds that are adjusted annually based on 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 2020. For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount in 2020 for the safe harbor for a first violation penalty fee will increase by $1 to $29 and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will increase by $1 to $40. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2020 will be $21,980. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2020 will be $1,099. For qualified mortgages, which provide creditors with certain protections from liability under the Ability-to-Repay Rule, the maximum thresholds for total points and fees in 2020 will be 3 percent of the total loan amount for a loan greater than or equal to $109,898; $3,297 for a loan amount greater than or equal to $65,939 but less than $109,898; 5 percent of the total loan amount for a loan greater than or equal to $21,980 but less than $65,939; $1,099 for a loan amount greater than or equal to $13,737 but less than $21,980; and 8 percent of the total loan amount for a loan amount less than $13,737.
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 minimum interest charge thresholds will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for this adjustment.[1] If the cumulative change in the adjusted minimum value derived from applying the annual CPI-W level to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) has risen by a whole dollar, the minimum interest charge amounts set forth in the regulation will be increased by $1.00. This adjustment analysis is based on the CPI-W index in effect on June 1, 2019, which was reported by BLS on May 10, 2019,[2] and reflects the percentage change from April 2018 to April 2019. The adjustment analysis accounts for a 1.9 percent increase in the CPI-W from April 2018 to April 2019. This increase in the CPI-W when applied to the current amounts in §§ 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 Bureau is therefore not amending §§ 1026.6(b)(2)(iii) and 1026.60(b)(3).
Section 1026.52(b)(1)(ii)(A) and (B) of Regulation Z implements section 149(e) of TILA, which was added to TILA by the CARD Act.[3] Section 1026.52(b)(1)(ii)(D) provides that the safe harbor provision, which establishes the permissible penalty fee thresholds in § 1026.52(b)(1)(ii)(A) and (B), will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the CPI-W for this adjustment. If the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, if the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those amounts will be decreased by $1.00. See comment 52(b)(1)(ii)-2. The 2020 adjustment analysis is based on the CPI-W index in effect on June 1, 2019, which was reported by BLS on May 10, 2019, and reflects the percentage change from April 2018 to April 2019. The adjustment to the permissible fee Start Printed Page 37566thresholds of $29 for a first violation penalty fee and $40 for a subsequent violation being adopted here reflects a 1.9 percent increase in the CPI-W from April 2018 to April 2019 and is rounded to the nearest $1 increment.
Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431 of the Dodd-Frank Act,[4] which amended the HOEPA points-and-fees coverage test. Under § 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 this threshold amount be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment.[5] The 2020 adjustment is based on the CPI-U index in effect on June 1, which was reported by BLS on May 10, 2019, and reflects the percentage change from April 2018 to April 2019. The adjustment to $21,980 here reflects a 2 percent increase in the CPI-U index from April 2018 to April 2019 and is rounded to the nearest whole dollar amount for ease of compliance.
Under § 1026.32(a)(1)(ii)(B) the HOEPA points-and-fees threshold is $1,000. Section 1026.32(a)(1)(ii)(B) provides that this threshold amount will be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment. The 2020 adjustment is based on the CPI-U index in effect on June 1, 2019, which was reported by BLS on May 10, 2019, and reflects the percentage change from April 2018 to April 2019. The adjustment to $1,099 here reflects a 2 percent increase in the CPI-U index from April 2018 to April 2019 and is rounded to the nearest whole dollar amount for ease of compliance.
The Bureau'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 qualified mortgages. Under § 1026.43(e)(3)(i), 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 $100,000; $3,000 for a loan amount greater than or equal to $60,000 but less than $100,000; 5 percent of the total loan amount for loans greater than or equal to $20,000 but less than $60,000; $1,000 for a loan amount greater than or equal to $12,500 but less than $20,000; or 8 percent of the total loan amount for loans less than $12,500. Section 1026.43(e)(3)(ii) provides that the limits and loan amounts in § 1026.43(e)(3)(i) are recalculated annually for inflation using the CPI-U index in effect on June 1. The 2020 adjustment is based on the CPI-U index in effect on June 1, 2019, which was reported by BLS on May 10, 2019, and reflects the percentage change from April 2018 to April 2019. The adjustment to the 2019 figures [6] being adopted here reflects a 2 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.
The minimum interest charge amounts for §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for the year 2020. Accordingly, the Bureau is not amending these sections of Regulation Z.
Effective January 1, 2020, the permissible fee threshold amounts increased by $1 and are $29 for § 1026.52(b)(1)(ii)(A) and $40 for § 1026.52(b)(1)(ii)(B). Accordingly, the Bureau is revising § 1026.52(b)(1)(ii)(A) and (B) to state that the fee imposed for violating the terms or other requirements of an account shall not exceed $29 and $40, respectively. The Bureau is also amending comment 52(b)(1)(ii)-2.i to preserve a list of the historical thresholds for this provision.
Effective January 1, 2020, for purposes of determining under § 1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to which a transaction is subject, the total loan amount threshold is $21,980, and the adjusted points-and-fees dollar trigger under § 1026.32(a)(1)(ii)(B) is $1,099. If the total loan amount for a transaction is $21,980 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 $21,980, and the points-and-fees amount exceeds the lesser of the adjusted points-and-fees dollar trigger of $1,099 or 8 percent of the total loan amount, the transaction is a high-cost mortgage. The Bureau is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments for each year, to reflect for 2020 the new loan amount dollar threshold and the new points-and-fees dollar trigger, respectively.
Effective January 1, 2020, a covered transaction is not a qualified mortgage if, pursuant to § 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 $109,898; $3,297 for a loan amount greater than or equal to $65,939 but less than $109,898; 5 percent of the total loan amount for loans greater than or equal to $21,980 but less than $65,939; $1,099 for a loan amount greater than or equal to $13,737 but less than $21,980; or 8 percent of the total loan amount for loans less than $13,737. The Bureau is amending comment 43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect the new dollar threshold amounts for 2020.
Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.[7] Pursuant to this final rule, in Regulation Z, § 1026.52(b)(1)(ii)(A) and (B) in subpart G is amended and comments 32(a)(1)(ii)-1.vi and -3.vi, 43(e)(3)(ii)-Start Printed Page 375671.vi, and 52(b)(1)(ii)-2.i.G in Supplement I are added 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 Bureau 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.
Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.[8]
In accordance with the Paperwork Reduction Act of 1995,[9] the Bureau reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.
c. Under Section 1026.52—Limitations on Fees, section 52(b)(1)(ii) Safe harbors is revised.
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.
xiii. For 2008, $561, reflecting a 2.56 percent increase in the CPI-U from June Start Printed Page 375682006 to June 2007, rounded to the nearest whole dollar.
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;Start Printed Page 37569
E. For a loan amount less than $13,737: 8 percent of the total loan amount.
C. Transactions that exceed the credit limit. For purposes of § 1026.52(b)(1)(ii), a transaction that exceeds the credit limit for an account occurs during the billing cycle in which the transaction occurs or is authorized by the card issuer.
C. Violations of different types (late payment and returned payment). A required minimum periodic payment of $50 is due on July 25. On July 26, a late payment has occurred because no payment has been received. Accordingly, consistent with § 1026.52(b)(1)(ii)(A), the card issuer imposes a $25 late payment fee on July 26. On July 30, the card issuer receives a $50 payment. A required minimum periodic payment of $50 is due on August 25. On August 24, a $50 payment is received. On August 27, the $50 payment is returned to the card issuer for insufficient funds. In these circumstances, § 1026.52(b)(2)(ii) permits the card issuer to impose either a late payment fee or a returned payment fee but not both because the late payment and the returned payment result from the same event or transaction. Accordingly, for purposes of § 1026.52(b)(1)(ii), the event or transaction constitutes a single violation. However, if the card issuer imposes a late payment fee, § 1026.52(b)(1)(ii)(B) permits the issuer to impose a fee of $35 because the late payment occurred during the six billing cycles following the July billing cycle. In contrast, if the card issuer imposes a Start Printed Page 37570returned payment fee, the amount of the fee may be no more than $25 pursuant to § 1026.52(b)(1)(ii)(A).
G, Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $28 under § 1026.52(b)(1)(ii)(A) and $39 under § 1026.52(b)(1)(ii)(B), through December 31, 2019.
i. Assume that a charge card issuer requires payment of outstanding balances in full at the end of each billing cycle and that the billing cycles for the account begin on the first day of the month and end on the last day of the month. At the end of the June billing cycle, the account has a balance of $1,000. On July 5, the card issuer provides a periodic statement disclosing the $1,000 balance consistent with § 1026.7. During the July billing cycle, the account is used for $300 in transactions, increasing the balance to $1,300. At the end of the July billing cycle, no payment has been received and the card issuer imposes a $25 late payment fee consistent with § 1026.52(b)(1)(ii)(A). On August 5, the card issuer provides a periodic statement disclosing the $1,325 balance consistent with § 1026.7. During the August billing cycle, the account is used for $200 in transactions, increasing the balance to $1,525. At the end of the August billing cycle, no payment has been received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $40, which is 3% of the $1,325 balance that was due at the end of the August billing cycle. Section 1026.52(b)(1)(ii)(C) does not permit the card issuer to include the $200 in transactions that occurred during the August billing cycle.
1. The CPI-W is a subset of the Consumer Price Index for All Urban Consumers (CPI-U) index and represents approximately 29 percent of the U.S. population.
2. BLS publishes Consumer Price Indices monthly, usually in the middle of each calendar month. Thus, the CPI-W reported on May 10, 2019 was the most current as of June 1, 2019.
3. Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111-24, 123 Stat. 1734 (2009).
5. The CPI-U is based on all urban consumers and represents approximately 93 percent of the U.S. population.
6. For 2020, 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 $109,898; $3,297 for a loan amount greater than or equal to $65,939 but less than $109,898; 5 percent of the total loan amount for loans greater than or equal to $21,980 but less than $65,939; $1,099 for a loan amount greater than or equal to $13,737 but less than $21,980; or 8 percent of the total loan amount for loans less than $13,737.
9. 44 U.S.C. 3506; 5 CFR part 1320.
[FR Doc. 2019-16300 Filed 7-31-19; 8:45 am]
37565-37570 (6 pages)
Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending
2019-16300.pdf
» 3170-0015 (Reg Z) Supporting Statement 60 day FRN
12 CFR 1026.52