HPML ESCROW EXEMPTION THRESHOLD INCREASED FOR 2021

For 2021, 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 (HPML). The exemption threshold is adjusted to increase to $2.230 billion from $2.202 billion. Creditors with assets of less than $2.230 billion (including assets of certain affiliates) as of Dec. 31, 2020 are exempt from establishing escrow accounts for HPMLs in 2021, if other requirements of Regulation Z also are met. The revised commentary to Regulation Z, Paragraph 1026.35(b)(2)(iii)-1(iii)(E), includes the amended threshold stating:

Under § 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset threshold adjusts automatically each year 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 12-month period ending in November, with rounding to the nearest million dollars. The Bureau will publish notice of the asset threshold each year by amending this comment. For calendar year 2021, the asset threshold is $2,230,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2019 has total assets of less than $2,230,000,000 on December 31, 2020, satisfies this criterion for purposes of any loan consummated in 2021 and for purposes of any loan consummated in 2022 for which the application was received before April 1, 2022.

The final rule posted in the Federal Register is available here.

All lending thresholds, revised for 2021, can be found in the “Resources” section of our website under Lending Thresholds Chart.

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