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Trying to keep up with compliance these days can feel as if you might be running in circles, or if you are like me, paying the price in the form of an abundant loss of hair. New rules and requirements continue to be released, seemingly on a weekly basis. While staying current on these new requirements, credit unions also need to be aware of the annual threshold updates to certain regulations.
The Consumer Financial Protection Bureau recently published a final rule revising dollar amounts for certain regulations falling under Regulation Z (1) that implement the CARD Act safe-harbor penalty fee amounts, (2) for points and fees related to the Home Ownership and Equity Protection Act (here’s a compliance guide ), and (3) for loan amount, point and fee limits under the ability-to-repay and qualified mortgage provisions of the Dodd-Frank Act.
All of these threshold adjustments will be effective Jan. 1, 2017, except the credit card penalty fee amounts.
Regarding the credit card penalty fees safe harbor:
- The current $27 dollar amount for the safe harbor for a first violation penalty fee will remain unchanged in 2017.
- The subsequent violation penalty fee amount of $37 in effect during 2016 was miscalculated and should have been stated as $38. The final rule increases the 2016 amount to $38. This increase will be effective immediately upon publication in the Federal Register. The penalty fee amount of $38, for subsequent late payments within the same six-month period, will continue to apply in 2017.
The annual threshold adjustment for a high-cost mortgage loan under HOEPA will change in 2017. HOEPA loans will have the adjusted total loan amount threshold for high-cost mortgages increase from the current 2016 loan amount of $20,350 to the 2017 amount of $20,579. The adjusted points and fees dollar trigger for high-cost mortgages will increase from the current 2016 fee trigger of $1,017 to the 2017 fee trigger of $1,029.
Finally, the ability-to-repay and qualified mortgage annual threshold adjustments under Dodd-Frank will change as well. To determine if a covered transaction is a qualified mortgage, loan points and fees may not exceed the following thresholds for the size of the loan:
- For a loan amount greater than or equal to $102,894, the points or fees may not exceed 3 percent of the total loan amount.
- For a loan amount greater than or equal to $61,737 but less than $102,894, the points or fees may not exceed $3,087.
- For a loan amount greater than or equal to $20,579 but less than $61,737, the points or fees may not exceed 5 percent of the total loan amount.
- For a loan amount greater than or equal to $12,862 but less than $20,579, the points or fees may not exceed $1,029.
- For a loan amount less than or equal to $12,862, the points or fees may not exceed 8 percent of the total loan amount.
Make sure all loan staff are aware of the new thresholds for 2017. And for your sakes, I hope you all maintain your head of hair as your credit union implements these new standards and maintains vigilance for further regulatory changes.
Jason Skemp is senior manager of Compliance Solutions for PolicyWorks, a national leader of credit union compliance solutions. He works extensively with individual credit unions by reviewing policies, procedures, documents and operations related to loans and deposit accounts, advising them on changes to achieve compliance with federal regulations.
