Based on the 4.6% increase in the Consumer Price Index (CPI-W) in effect on June 1, 2023, the Consumer Financial Protection Bureau (CFPB) released a number of new thresholds which go into effect on January 1, 2024. 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))
- Again, there was no mention in the Federal Register of adjusting the dollar amount for the penalty fees safe harbor under the CARD Act. (1026.52(b)(1)(ii)) There was no mention likely because the CFPB is in the process of evaluating “junk fees” for all areas and had issued a proposed rule in February 2023 to set the late fee limit at $8.00, remove the upper limit, remove the indexing to inflation and provide late fee amounts cannot exceed more than 25% of the required payment.
Additionally, these changes affected the HOEPA threshold amounts found under 1026.32 based on the 4.9% increase in the Consumer Price Index (CPI-U) in effect on June 1, 2023.
- For HOEPA loans, the adjusted total loan amount threshold is $26,092, up from $24,866 in 2023. (1026.32(a)(1)(ii)(A))
- The adjusted statutory fee trigger for HOPEA loans is $1,305, up from $1,243 in 2023. (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 $130,461 (up from $124,331);
- $3,914 (up from $3,730) for a loan amount greater than or equal to $78,277 (up from $74,599) but less than $130,461;
- 5 percent of the total loan amount for a loan greater than or equal to $26,092 (up from $24,866) but less than $78,277;
- $1,305 for a loan amount greater than or equal to $16,308 (up from $15,541) but less than $26,092;
- 8 percent of the total loan amount for a loan amount less than $16,308.
The new percentage thresholds for Qualified Mortgages under the General QM definition (1026.43(e)(2)(vi)) which replaced the 43% DTI Appendix Q requirement, cannot exceed the percentages below and be considered General QM. The thresholds for 2024 are:
- 2.25 or more percentage points for a first lien covered transaction with a loan amount greater than or equal to $130,461;
- 3.5 or more percentage points for a first lien covered transaction with a loan amount greater than or equal to $78,277 but less than $130,461;
- 6.5 or more percentage points for a first lien covered transaction with a loan amount less than 78,277;
- 6.5 or more percentage points for a first lien covered transaction secured by a manufactured home with a loan amount less than $130,461;
- 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $78,277; or
- 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $78,277.
All the thresholds shown above are effective starting on January 1, 2024.
You can find the Federal Register announcement here.
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