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In the CFPB’s upcoming ATR rules, does the threshold for a “higher-priced” balloon loan include a different threshold for jumbo loans? – IBA Compliance Connection

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In the CFPB’s upcoming ATR rules, does the threshold for a “higher-priced” balloon loan include a different threshold for jumbo loans?

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The CFPB’s ability-to-repay (ATR) rules include their own definition of a “higher-priced” loan. 12 CFR 1026.43(b)(4) (as of the June 12, 2013 amendment of the rule). The rule’s “higher-priced” definition does not include a separate interest rate threshold for jumbo loans, and instead sets the thresholds based on whether the loan is first-lien or subordinate-lien, or a qualified mortgage (QM) under the small creditor portfolio and balloon loan exemptions:

(4) Higher-priced covered transaction means a covered transaction with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set by 1.5 or more percentage points for a first-lien covered transaction, other than a qualified mortgage under paragraph (e)(5), (e)(6), or (f) of this section; by 3.5 or more percentage points for a first-lien covered transaction that is a qualified mortgage under paragraph (e)(5), (e)(6), or (f) of this section; or by 3.5 or more percentage points for a subordinate-lien covered transaction.