IBA Compliance Connection

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We are updating the fields in our LaserPro system for end-of-year HOEPA triggers, and there are fields to enter the HOEPA triggers for first lien non-real estate loans less than $20,000 and greater than or equal to $20,000. Where can I find these thresholds?

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The HOEPA (i.e., high-cost mortgage loan) points and fees trigger is based on whether the loan amount is less than an inflation-adjusted threshold of $20,000, or greater than or equal to the inflation-adjusted threshold of $20,000. For 2019, that threshold was $21,549. For 2020, that threshold is $21,980.

Additionally, for transactions that are less than the inflation-adjusted threshold, the total points and fees threshold is the lesser of 8% or an inflation-adjusted amount of $1,000. For 2019, that amount was 1,077. For 2020, that amount is $1,099.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.32(a)(1)(ii) (“The requirements of this section apply to a high-cost mortgage, which is any consumer credit transaction that is secured by the consumer's principal dwelling, other than as provided in paragraph (a)(2) of this section, and in which: . . . (ii) The transaction’s total points and fees, as defined in paragraphs (b)(1) and (2) of this section, will exceed:

(A) 5 percent of the total loan amount for a transaction with a loan amount of $20,000 or more; the $20,000 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1; or

(B) The lesser of 8 percent of the total loan amount or $1,000 for a transaction with a loan amount of less than $20,000; the $1,000 and $20,000 figures shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1; . . .”)

  • Official Interpretations, Regulation Z, Paragraph 32(a)(1)(ii), Comment 1 (“Annual adjustment of $1,000 amount. The $1,000 figure in § 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. . . .

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.”)

  • Official Interpretations, Regulation Z, Paragraph 32(a)(1)(ii), Comment 3 (“For purposes of § 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 § 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 § 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. . . .

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.”)