The Consumer Financial Protection Bureau (“CFPB”) is required to calculate annually the dollar amounts for several provisions in Regulation Z. The CFPB recently issued a final rule amending the dollar amount thresholds under the HOEPA “points and fees” provisions of Regulation Z (12 CFR § 1026.32)(a)(1)(ii)) , referred to as “Section 32” by the industry, and the qualified mortgage “points and fees” provisions under Regulation Z (12 CFR § 1026.43((e)(3)(i)) based on the annual percentage change provided in the Consumer Price Index (CPI-U) in effect on June 1, 2023.
The threshold adjustments will be effective January 1, 2024.
HOEPA Points and Fees Thresholds
The adjusted HOEPA points-and-fees dollar trigger for high-cost mortgages in 2024 will increase from $1,243 to $1,305. Additionally, the total loan amount threshold used to determine whether a loan is subject to the “total points and fees” provision of HOEPA, or Section 32 will increase from $24,866 for 2023 to $26,092 for 2024.
The fee-based trigger is used to determine whether the total points and fees payable by the consumer at or before loan closing subjects that loan to Section 32. Section 32 applies, in part, to certain loans if the total points and fees payable by the consumer at or before loan closing exceed the greater of eight percent (8%) of the total loan amount or a dollar amount threshold.
In addition to the Federal Section 32 test, this annual adjustment applies to the following state high-cost tests: Colorado, Illinois, Maryland, Massachusetts, Oklahoma, Pennsylvania, Texas, and Utah. Please click here for more information.
To see DocMagic’s memorandum regarding HOEPA determination, please see Section 32 High-Cost Calculation.
Qualified Mortgage Points and Fees Thresholds
The final rule updates the dollar amount thresholds for determining whether a loan is a qualified mortgage (“QM”) under the “points and fees” provision specified in Regulation Z (12 CFR § 1026.43(e)(3)(i)).
![For all categories of QMs, the thresholds for total points and fees in 2024 will be 3 percent of the total loan amount for a loan greater than or equal to $130,461; $3,914 for a loan amount greater than or equal to $78,277 but less than $130,461; 5 percent of the total loan amount for a loan greater than or equal to $26,092 but less than $78,277; $1,305 for a loan amount greater than or equal to $16,308 but less than $26,092; and 8 percent of the total loan amount for a loan amount less than $16,308.[2]](/sites/default/files/inline-images/image_1.png)
Qualified Mortgage Price-Based Limit Categories
Additionally, the CFPB has made updates to the thresholds applicable for the General QM Price-Based Limit. The top loan amount category for a first-lien loan secured by a non-manufactured home will increase to $130,461 from $124,331using a 2.25% threshold:
![For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2024 will be $26,092. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2024 will be $1,305. For qualified mortgages (QMs) under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) [1] in 2024 will be: 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. For all categories of QMs, the thresholds for total points and fees in 2024 will be 3 percent of the total loan amount for a loan greater than or equal to $130,461; $3,914 for a loan amount greater than or equal to $78,277 but less than $130,461; 5 percent of the total loan amount for a loan greater than or equal to $26,092 but less than $78,277; $1,305 for a loan amount greater than or equal to $16,308 but less than $26,092; and 8 percent of the total loan amount for a loan amount less than $16,308.[2]](/sites/default/files/inline-images/image_0.png)
