The Bureau of Consumer Financial Protection (“Bureau”) issued a final rule amending the regulatory text and official interpretations for Regulation Z, which implements the Truth in Lending Act (“TILA”). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule reviews the dollar amounts for provisions implementing amendments to TILA under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (“CARD Act”), the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). These amounts are adjusted, where appropriate, based on the annual percentage change reflected in the Consumer Price Index in effect on June 1, 2014.
The minimum interest charge disclosure thresholds remain unchanged in 2015. The adjusted dollar amount for the penalty fees safe harbor in 2015 is $27 for a first late payment and $38 for each subsequent violation within the following six months.
For HOEPA loans, the adjusted total loan amount threshold is $20,391, effective January 1, 2015. The adjusted statutory fee trigger for HOPEA loans is $1,020, effective January 1, 2015. Effective January 1, 2015, for the purpose of 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 $101,953; $3,059 for a loan amount greater than or equal to $61,172 but less than $101,953; 5 percent of the total loan amount for a loan greater than or equal to $20,391 but less than $61,172; $1,020 for a loan amount greater than or equal to $12,744 but less than $20,391; and 8 percent of the total loan amount for a loan amount less than $12,744.
Banks should get a head start on at least making their employees aware of the changes and come up with a plan for implementation. It can’t hurt to make a chart and hang it on your bulletin board in the loan department, at least so employees will know what the updated calculations are.
Senior Quality Control and Review Specialist
Sharon Geiger has 27 years banking experience, 21 of which have been involved in internal audit. She has extensive knowledge of all aspects of the banking industry, with a particular emphasis on regulatory compliance and identifying risks and controls. As QCR Specialist, she performs Quality Control Reviews to ensure all workpapers and reports are completed in compliance with the firm's standards.