Dollar amount triggers for Truth in Lending Act (TILA) regulations affecting consumer credit and mortgage loans are unchanged for open-end credit plans in 2021 but will rise a fraction of a percentage point under a final rule from the Consumer Financial Protection Bureau (CFPB) slated to publish Wednesday in the Federal Register.
The 2021 amounts, determined based on the annual percentage change in the Consumer Price Index (CPI) and effective on Jan. 1, are as follows:
Open-end consumer credit: The threshold that triggers Truth in Lending Act (TILA) requirements to disclose minimum interest charges will remain unchanged at $1. For open-end consumer credit plans under the CARD Act (Credit Card Accountability, Responsibility and Disclosure Act, added to TILA in 2004), the adjusted dollar amount for the safe harbor for a first violation penalty fee will remain unchanged at $29; the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will also remain unchanged at $40.
High-cost mortgages: The adjusted total loan amount threshold for high-cost mortgages in 2021 (under the Home Ownership and Equity Protection Act, added to TILA in 1994) will be $22,052. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2021 will be $1,103. The revised commentary to the CFPB rule states that a loan is considered a high-cost mortgage if the total loan amount for a transaction is $22,052 or more, and the points-and-fees amount exceeds 5% of the total loan amount; or if the total loan amount is less than $22,052, and the points-and-fees amount exceeds the lesser of the adjusted points-and-fees dollar trigger of $1,103 or 8% of the total loan amount.
Qualified mortgages (QMs): For loans receiving the QM “safe harbor” protections from liability under the Reg Z ability-to-repay provisions, the maximum thresholds for total points and fees in 2021 will be 3% of the total loan amount for a loan greater than or equal to $110,260; $3,308 for a loan amount greater than or equal to $66,156 but less than $110,260; 5% of the total loan amount for a loan greater than or equal to $22,052 but less than $66,156; $1,103 for a loan amount greater than or equal to $13,783 but less than $22,052; and 8% of the total loan amount for a loan amount less than $13,783.