The dollar threshold for home loans that are subject to the Home Ownership and Equity Protection Act of 1994 has been increased.
The higher threshold for HOEPA is consistent with Truth-in-Lending Act amendments required in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Dodd-Frank requires the thresholds to be adjusted annually based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Word of the increased HOEPA threshold came Tuesday from the Consumer Financial Protection Bureau and the Federal Reserve Board. While Dodd-Frank has TILA rulemaking authority generally being transferred to the CFPB, the Fed retains authority to issue rules for certain motor vehicle dealers.
The HOEPA adjustments are part of a final rule by the CFPB amending the official interpretations for Regulation Z, which implements the TILA.
Currently, HOEPA kicks in when total points and fees payable by the consumer at or before loan consummation exceed the greater of 8 percent or $400.
Based on the adjustments announced by the CFPB, the dollar amount of the HOEPA fee trigger will increase to $625 for 2013.
The latest adjustment reflects the annual percentage increase in the consumer price index as of June 1 and will take effect for one year on Jan. 1, 2013, unless final rules proposed by the CFPB in July become effective sooner.
Protections that were adopted by the Fed in July 2008 for “higher-priced mortgage loans” based on how the interest rate on a residential mortgage compares with market rates are not impacted by the latest changes.
