2015 LENDING COMPLIANCE THRESHOLDS

Numerous regulatory requirements have thresholds that change annually. Following is a review of several of the lending thresholds that have changed recently.

CRA – Small Bank and Intermediate Small Bank – Effective January 1, 2105 each federal financial institution regulatory agency defines the term “small bank” to mean a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.221 billion. The term “intermediate small bank” means a small bank with assets of at least $305 million as of December 31 of both of the prior two calendar years and less than $1.221 billion as of December 31 of either of the prior two calendar years.

HMDA – Coverage (12 CFR 1003.2) – Regulation C applies to “financial institutions” that on the preceding December 31 had, among other characteristics, assets in excess of the asset threshold established and published annually by the CFPB for coverage by the act, based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each twelve month period ending in November, with rounding to the nearest million.

For data collection in 2015, the asset-size exemption threshold is $44 million. Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2014, are exempt from collecting data for 2015. 

Regulation Z – Exempt Transactions (12 CFR 1026.3) – An extension of credit in which the amount of credit extended exceeds the applicable threshold amount or in which there is an express written commitment to extend credit in excess of the applicable threshold amount is exempt from the requirements of Regulation Z (and Regulation M – Consumer Leasing), unless the extension of credit is:

  • Secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer; or
  • A private education loan as defined in §1026.46(b)(5).

Effective January 1, 2015 the exemption threshold is increased to $54,600.

HOEPA (12 CFR 1026.32) – To determine if a transaction is a HOEPA loan the regulation has a rate test, a points and fees test and a prepayment penalty test. The points and fees test contains dollar thresholds for the loan amount and for the amount of the points and fees.

A transaction is a HOEPA loan based on points and fees if the transaction’s total points and fees exceeds:

  • 5 percent of the total loan amount for a transaction with a loan amount of $20,000 or more; the $20,000 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1; or
  • The lesser of 8 percent of the total loan amount or $1,000 for a transaction with a loan amount of less than $20,000; the $1,000 and $20,000 figures shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1

Effective January 1, 2015 the loan amount threshold is $20,391 and the fee trigger is the lesser of 8 percent of the total loan amount or $1,020 for a transaction with a loan amount of less than $20,391.

Escrow Exemption for HPMLs (12 CFR 1026.35) – For 2015 the CFPB amended the official commentary that interprets the requirements of Regulation Z (Truth in Lending) to reflect a change in the asset size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan. The exemption threshold is adjusted to $2.060 billion from $2.028 billion. Therefore, creditors with assets of $2.060 billion or less as of December 31, 2014, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2015.

Appraisal Exemption for HPMLs (12 CFR 1026.35) – §1026.35(c)(2)(ii) excludes “small loans” from the appraisal requirements of this section of Regulation Z. The threshold amount is adjusted effective January 1 of every year by the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. The threshold amount for 2015 is $25,500.

ATR/QM (12 CFR 1026.43) – The ATR/QM rules limit the amount of the total points and fees that may be imposed on a transaction if the transaction is to qualify as a QM. The limits are recalculated annually using the Consumer Price Index for All Urban Consumers.  Effective January 1, 2015 a covered transaction is a qualified mortgage if, among other conditions, the transaction’s total points and fees do not exceed:

  • 3 percent of the total loan amount for a loan amount greater than or equal to $101,953;
  • $3,059 for a loan amount greater than or equal to $61,172 but less than $101,953;
  • 5 percent of the total loan amount for a loan amount greater than or equal to $20,391 but less than $61,172;
  • $1,020 for a loan amount greater than or equal to $12,744 but less than $20,391; and
  • 8 percent of the total loan amount for a loan amount less than $12,744.

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