We are not aware of any prohibitions of using a tiered prepayment penalty system based on the amount of the line of credit for a home equity line of credit (HELOC). As you noted, the CFPB’s new HOEPA rules qualify a loan as a “high-cost mortgage” if a prepayment penalty can be charged more than 36 months after account opening, or if the penalties exceed more than 2% of the amount prepaid. 12 CFR 1026.32(a)(1)(iii). (Once a loan qualifies as “high-cost,” the rules impose an outright prohibition on all prepayment penalties; the effect of the rule is therefore to limit prepayment penalties to the first 36 months of the loan and to 2% of the amount prepaid. 12 CFR 1026.32(d)(6)Official Interpretations, 12 CFR 1026, paragraph 32(a)(1)(iii), Comment 1.)

The staff commentary to the rule provides examples of calculating permissible and impermissible prepayment penalties for open-end credit plans. These comments equate the term “amount prepaid” with “initial credit limit for the plan” and conclude that a prepayment penalty cannot exceed 2% of the initial credit limit for an open-end credit plan. Official Interpretations, 12 CFR 1026, paragraph 32(a)(1)(iii), Comment 2. Given the 2% limit on prepayment penalties, we see no problem in changing the amount of your cancellation fees based on the amount of the plan’s line of credit.