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Regulation Z HOEPA and Qualified Mortgage Annual Threshold Adjustments

Published on Thursday, August 31, 2017 in Client and Friends Memo, TILA, HOEPA

In the August 30, 2017, issue of the Federal Register (82 FR 41158, click here), the Consumer Financial Protection Bureau established the following 2018 thresholds for high-cost and qualified mortgages under §§1026.32 and 1026.43, respectively.

HOEPA (High-cost Mortgages) 2018 Threshold Adjustments

·         Effective January 1, 2018, a consumer loan secured by the consumer’s principal dwelling and not otherwise exempt is a high-cost mortgage based on the total points and fees payable by the consumer under §1026.32(a)(1)(ii) if the points and fees exceed: (A) 5 percent of the total loan amount for a loan with a loan amount of $21,032 or more, or (B) the lesser of 8 percent of the total loan amount or $1,052 for a loan with a loan amount of less than $21,032. Comment 32(a)(1)(ii)–1.iv is added to reflect the new $1,052 threshold amount for 2018. Comment 32(a)(1)(ii)–3.iv is added to reflect the new $21,032 threshold loan amount for 2018.

 Qualified Mortgages 2018 Threshold Adjustments

·         Effective January 1, 2018, for purposes of determining whether a covered transaction is a qualified mortgage under §1026.43(e), a covered transaction is not a qualified mortgage unless the transaction’s total points and fees in §1026.43(e)(3)(i) do not exceed: (A) 3 percent of the total loan amount for a loan amount greater than or equal to $105,158; (B) $3,155 for a loan amount greater than or equal to $63,095 but less than $105,158; (C) 5 percent of the total loan amount for a loan amount greater than or equal to $21,032 but less than $63,095; (D) $1,052 for a loan amount greater than or equal to $13,145 but less than $21,032; and (E) 8 percent of the total loan amount for a loan amount less than $13,145. Comment 43(e)(3)(ii)–1.iii is added to reflect the new threshold amounts for 2018.  

The above threshold adjustments are effective January 1, 2018, and will require updates to your software calculations for high-cost and qualified mortgages closing on and after the effective date.

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