2023 Annual Threshold Adjustments: HCM/HOEPA, QMs, and Credit Cards

The CFPB has recently published annual Regulation Z threshold adjustments months later than they normally publish them, which has caused quite a frenzy on our hotline. However, the crisis has been averted, as on December 21, the CFPB published adjustments to the High-Cost Mortgage (HCM) / Home Ownership and Equity Protection Act (HOEPA), Qualified Mortgages (QMs), and Credit Card thresholds which go into effect January 1, 2023.

HOEPA total loan amount

Under § 1026.32(a)(1)(ii)(A) and (B) a loan may be a HCM/HOEPA due to points and fees the creditor is charging, depending on whether the total loan amount is. The regulation states this threshold to be $20,000, which is recalculated by the CFPB annually. The threshold for 2022 is $22,969, and the threshold for 2023 will be $24,866.

HOEPA points-and-fees

Under § 1026.32(a)(1)(ii)(B), the HOEPA points-and-fees threshold is the lesser of 8% of the total loan amount or $1,000, which is recalculated by the CFPB annually. The threshold for 2022 is $1,148, and the threshold for 2023 will be $1,243.

Qualified Mortgages – General QMs

On December 10, 2020 the General QM loan definition in § 1026.43(e)(2) was amended, establishing pricing thresholds in § 1026.43(e)(2)(vi)(A) through (F) based on the spread of a loan’s Annual Percentage Rate (APR) compared to the Average Prime Offer Rate (APOR) for a comparable transaction as of the date the interest rate is set.

Under § 1026.43(e)(2)(vi), a loan is a QM if the APR does not exceed the APOR for a comparable transaction as of the date the interest rate is set by 2.25%, 3.5%, or 6.5% depending on whether it is a first or subordinate lien, and whether it is secured by a manufactured home. The loan amount pricing thresholds are recalculated by the CFPB annually. A loan is a QM if APR doesn’t exceed APOR by:

• First lien
  • 25% or more:
    • The 2022 loan amount is $114,847 or more
    • The 2023 loan amount will be $124,332 or more
  • 5% or more:
    • The 2022 loan amount is $68,908 to $114,846
    • The 2023 loan amount will be $74,599 to $124,331
  • 5% or more:
    • The 2022 loan amount is $68,907 or less
    • The 2023 loan amount will be $74,598 or less
  • First lien secured by a manufactured home
    • 5% or more
      • The 2022 loan amount is $114,846 or less
      • The 2023 loan amount will be $124,330 or less
    • Subordinate lien
      • 5% or more:
        • The 2022 loan amount is $68,908 or more
        • The 2023 loan amount will be $74,599 or more
      • 5 or more
        • The 2022 loan amount is $68,907 or less
        • The 2023 loan amount will be $74,598 or less

Points-and fees limits for all QMs

Under § 1026.43(e)(3)(i), a covered transaction is not a QM if the transaction’s total points and fees exceed either a percentage or dollar amount threshold, depending on the loan amount.

• 3 percent of the loan amount
  • The 2022 loan amount is $114,847 or more
  • The 2023 loan amount will be $124,331 or more
• $3,445 in 2022, will be $3,730 in 2023 for loan amounts
  • The 2022 loan amount is $68,908 to $114,846
  • The 2023 loan amount will be $74,599 to $124,330
• 5 percent of the loan amount
  • The 2022 loan amount is $22,969 to $68,907
  • The 2023 loan amount will be $24,866 to $74,598
• $1,148 in 2022, will be $1,243 in 2023 for loan amounts
  • The 2022 loan amount is $14,356 to $22,968
  • The 2023 loan amount will be $15,541 to $24,865
• 8 percent of the loan amount
  • The 2022 loan amount is $14,355 or less
  • The 2023 loan amount will be $15,540 or less

Credit Card Annual Adjustments

Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) require creditors to disclose any minimum interest charge exceeding $1.00 that could be imposed during a billing cycle, which is recalculated by the CFPB annually. If the change in the adjusted minimum has risen by a whole dollar, the CFPB increases the minimum interest charge amounts in the regulation by $1.00. The threshold for 2022 is $1.00, and based on the CFPB’s recalculation, there will not be an increase in the minimum interest charge threshold, so the current threshold of $1.00 will remain in effect during 2023.

These are not the only adjustments published by the CFPB for 2023, but are recent ones of note. If you have any questions about these thresholds or any of the others, feel free to reach out to us on the hotline.

Table Summary of Threshold Adjustments