Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)

Citation85 FR 50944
Published date19 August 2020
Record Number2020-15900
SectionRules and Regulations
CourtConsumer Financial Protection Bureau
Federal Register, Volume 85 Issue 161 (Wednesday, August 19, 2020)
[Federal Register Volume 85, Number 161 (Wednesday, August 19, 2020)]
                [Rules and Regulations]
                [Pages 50944-50950]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-15900]
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                BUREAU OF CONSUMER FINANCIAL PROTECTION
                12 CFR Part 1026
                Truth in Lending (Regulation Z) Annual Threshold Adjustments
                (Credit Cards, HOEPA, and Qualified Mortgages)
                AGENCY: Bureau of Consumer Financial Protection.
                ACTION: Final rule; official interpretation.
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                SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
                issuing this final rule amending the regulation text and official
                interpretations for Regulation Z, which implements the Truth in Lending
                Act (TILA). The Bureau is required to calculate annually the dollar
                amounts for several provisions in Regulation Z; this final rule
                revises, as applicable, the dollar amounts for provisions implementing
                TILA and amendments to TILA, including under the Credit Card
                Accountability Responsibility and Disclosure Act of 2009 (CARD Act),
                the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the
                Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
                Act). The Bureau is adjusting these amounts, where appropriate, based
                on the annual percentage change reflected in the Consumer Price Index
                (CPI) in effect on June 1, 2020.
                DATES: This final rule is effective January 1, 2021.
                FOR FURTHER INFORMATION CONTACT: Rachel Ross, Attorney-Advisor; Jaydee
                DiGiovanni, Counsel, Office of Regulations, at (202) 435-7700. If you
                require this document in an alternative
                [[Page 50945]]
                electronic format, please contact [email protected].
                SUPPLEMENTARY INFORMATION: The Bureau is amending the regulation text
                and official interpretations for Regulation Z, which implements TILA,
                to update the dollar amounts of various thresholds that are adjusted
                annually based on the annual percentage change in the CPI as published
                by the Bureau of Labor Statistics (BLS). Specifically, for open-end
                consumer credit plans under TILA, the threshold that triggers
                requirements to disclose minimum interest charges will remain unchanged
                at $1.00 in 2021. For open-end consumer credit plans under the CARD Act
                amendments to TILA, the adjusted dollar amount in 2021 for the safe
                harbor for a first violation penalty fee will remain unchanged at $29
                and the adjusted dollar amount for the safe harbor for a subsequent
                violation penalty fee will also remain unchanged at $40. For HOEPA
                loans, the adjusted total loan amount threshold for high-cost mortgages
                in 2021 will be $22,052. The adjusted points-and-fees dollar trigger
                for high-cost mortgages in 2021 will be $1,103. For qualified
                mortgages, which provide creditors with certain protections from
                liability under the Ability-to-Repay Rule, the maximum thresholds for
                total points and fees in 2021 will be 3 percent of the total loan
                amount for a loan greater than or equal to $110,260; $3,308 for a loan
                amount greater than or equal to $66,156 but less than $110,260; 5
                percent of the total loan amount for a loan greater than or equal to
                $22,052 but less than $66,156; $1,103 for a loan amount greater than or
                equal to $13,783 but less than $22,052; and 8 percent of the total loan
                amount for a loan amount less than $13,783.
                I. Background
                A. Credit Card Annual Adjustments
                Minimum Interest Charge Disclosure Thresholds
                 Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z
                implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. 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. These provisions also state that, for open-end consumer
                credit plans, the minimum interest charge thresholds will be re-
                calculated annually using the CPI that was in effect on the preceding
                June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners
                and Clerical Workers (CPI-W) for this adjustment.\1\ If the cumulative
                change in the adjusted minimum value derived from applying the annual
                CPI-W level to the current amounts in Sec. Sec. 1026.6(b)(2)(iii) and
                1026.60(b)(3) has risen by a whole dollar, the minimum interest charge
                amounts set forth in the regulation will be increased by $1.00. This
                adjustment analysis is based on the CPI-W index in effect on June 1,
                2020, which was reported by BLS on May 12, 2020,\2\ and reflects the
                percentage change from April 2019 to April 2020. The adjustment
                analysis accounts for a 0.1 percent increase in the CPI-W from April
                2019 to April 2020. This increase in the CPI-W when applied to the
                current amounts in Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) does
                not trigger an increase in the minimum interest charge threshold of at
                least $1.00, and the Bureau is therefore not amending Sec. Sec.
                1026.6(b)(2)(iii) and 1026.60(b)(3).
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                 \1\ The CPI-W is a subset of the Consumer Price Index for All
                Urban Consumers (CPI-U) index and represents approximately 29
                percent of the U.S. population.
                 \2\ BLS publishes Consumer Price Indices monthly, usually in the
                middle of each calendar month. Thus, the CPI-W reported on May 12,
                2020, was the most current as of June 1, 2020.
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                Safe Harbor Penalty Fees
                 Section 1026.52(b)(1)(ii)(A) and (B) of Regulation Z implements
                section 149(e) of TILA, which was added to TILA by the CARD Act.\3\
                Section 1026.52(b)(1)(ii)(D) provides that the safe harbor provision,
                which establishes the permissible penalty fee thresholds in Sec.
                1026.52(b)(1)(ii)(A) and (B), will be re-calculated annually using the
                CPI that was in effect on the preceding June 1; the Bureau uses the
                CPI-W for this adjustment. If the cumulative change in the adjusted
                value derived from applying the annual CPI-W level to the current
                amounts in Sec. 1026.52(b)(1)(ii)(A) and (B) has risen by a whole
                dollar, those amounts will be increased by $1.00. Similarly, if the
                cumulative change in the adjusted value derived from applying the
                annual CPI-W level to the current amounts in Sec. 1026.52(b)(1)(ii)(A)
                and (B) has decreased by a whole dollar, those amounts will be
                decreased by $1.00. See comment 52(b)(1)(ii)-2. The 2021 adjustment
                analysis is based on the CPI-W index in effect on June 1, 2020, which
                was reported by BLS on May 12, 2020, and reflects the percentage change
                from April 2019 to April 2020. The permissible fee thresholds of $29
                for a first violation penalty fee and $40 for a subsequent violation
                will remain unchanged and reflect a 0.1 percent increase in the CPI-W
                from April 2019 to April 2020 with the resulting thresholds rounded to
                the nearest $1 increment.
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                 \3\ Credit Card Accountability Responsibility and Disclosure Act
                of 2009, Public Law 111-24, 123 Stat. 1734 (2009).
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                B. HOEPA Annual Threshold Adjustments
                 Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431
                of the Dodd-Frank Act,\4\ which amended the HOEPA points-and-fees
                coverage test. Under Sec. 1026.32(a)(1)(ii)(A) and (B), in assessing
                whether a transaction is a high-cost mortgage due to points and fees
                the creditor is charging, the applicable points-and-fees coverage test
                depends on whether the total loan amount is for $20,000 or more, or for
                less than $20,000. Section 1026.32(a)(1)(ii) provides that this
                threshold amount be recalculated annually using the CPI index in effect
                on the preceding June 1; the Bureau uses the CPI-U for this
                adjustment.\5\ The 2021 adjustment is based on the CPI-U index in
                effect on June 1, which was reported by BLS on May 12, 2020, and
                reflects the percentage change from April 2019 to April 2020. The
                adjustment to $22,052 here reflects a 0.3 percent increase in the CPI-U
                index from April 2019 to April 2020 and is rounded to the nearest whole
                dollar amount for ease of compliance.
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                 \4\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
                Public Law 111-203, 124 Stat. 1376 (2010).
                 \5\ The CPI-U is based on all urban consumers and represents
                approximately 93 percent of the U.S. population.
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                 Under Sec. 1026.32(a)(1)(ii)(B) the HOEPA points-and-fees
                threshold is $1,000. Section 1026.32(a)(1)(ii)(B) provides that this
                threshold amount will be recalculated annually using the CPI index in
                effect on the preceding June 1; the Bureau uses the CPI-U for this
                adjustment. The 2021 adjustment is based on the CPI-U index in effect
                on June 1, 2020, which was reported by BLS on May 12, 2020, and
                reflects the percentage change from April 2019 to April 2020. The
                adjustment to $1,103 here reflects a 0.3 percent increase in the CPI-U
                index from April 2019 to April 2020 and is rounded to the nearest whole
                dollar amount for ease of compliance.
                C. Qualified Mortgages Annual Threshold Adjustments
                 The Bureau's Regulation Z implements sections 1411 and 1412 of the
                Dodd-Frank Act, which generally require creditors to make a reasonable,
                good-faith determination of a consumer's ability to repay any consumer
                credit transaction secured by
                [[Page 50946]]
                a dwelling and establishes certain protections from liability under
                this requirement for qualified mortgages. Under Sec. 1026.43(e)(3)(i),
                a covered transaction is not a qualified mortgage if the transaction's
                total points and fees exceed: 3 percent of the total loan amount for a
                loan amount greater than or equal to $100,000; $3,000 for a loan amount
                greater than or equal to $60,000 but less than $100,000; 5 percent of
                the total loan amount for loans greater than or equal to $20,000 but
                less than $60,000; $1,000 for a loan amount greater than or equal to
                $12,500 but less than $20,000; or 8 percent of the total loan amount
                for loans less than $12,500. Section 1026.43(e)(3)(ii) provides that
                the limits and loan amounts in Sec. 1026.43(e)(3)(i) are recalculated
                annually for inflation using the CPI-U index in effect on the preceding
                June 1. The 2021 adjustment is based on the CPI-U index in effect on
                June 1, 2020, which was reported by BLS on May 12, 2020, and reflects
                the percentage change from April 2019 to April 2020. The adjustment to
                the 2020 figures \6\ being adopted here reflects a 0.3 percent increase
                in the CPI-U index for this period and is rounded to whole dollars for
                ease of compliance.
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                 \6\ For 2021, a covered transaction is not a qualified mortgage
                if the transaction's total points and fees exceed 3 percent of the
                total loan amount for a loan amount greater than or equal to
                $110,260; $3,308 for a loan amount greater than or equal to $66,156
                but less than $110,260; 5 percent of the total loan amount for loans
                greater than or equal to $22,052 but less than $66,156; $1,103 for a
                loan amount greater than or equal to $13,783 but less than $22,052;
                or 8 percent of the total loan amount for loans less than $13,783.
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                II. Adjustment and Commentary Revision
                A. Credit Card Annual Adjustments
                Minimum Interest Charge Disclosure Thresholds--Sec. Sec.
                1026.6(b)(2)(iii) and 1026.60(b)(3)
                 The minimum interest charge amounts for Sec. Sec.
                1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for
                the year 2021. Accordingly, the Bureau is not amending these sections
                of Regulation Z.
                Safe Harbor Penalty Fees--Sec. 1026.52(b)(1)(ii)(A) and (B)
                 Effective January 1, 2021, the permissible fee threshold amounts
                did not increase from the amounts for 2020 and remain at $29 for Sec.
                1026.52(b)(1)(ii)(A) and $40 for Sec. 1026.52(b)(1)(ii)(B).
                Accordingly, the Bureau is leaving Sec. 1026.52(b)(1)(ii)(A) and (B)
                unchanged. The Bureau is amending comment 52(b)(1)(ii)-2.i to preserve
                a list of the historical thresholds for this provision.
                B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3
                 Effective January 1, 2021, for purposes of determining under Sec.
                1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to
                which a transaction is subject, the total loan amount threshold is
                $22,052, and the adjusted points-and-fees dollar trigger under Sec.
                1026.32(a)(1)(ii)(B) is $1,103. If the total loan amount for a
                transaction is $22,052 or more, and the points-and-fees amount exceeds
                5 percent of the total loan amount, the transaction is a high-cost
                mortgage. If the total loan amount for a transaction is less than
                $22,052, and the points-and-fees amount exceeds the lesser of the
                adjusted points-and-fees dollar trigger of $1,103 or 8 percent of the
                total loan amount, the transaction is a high-cost mortgage. The Bureau
                is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments
                for each year, to reflect for 2021 the new points-and-fees dollar
                trigger and the new loan amount dollar threshold, respectively.
                C. Qualified Mortgages Annual Threshold Adjustments
                 Effective January 1, 2021, a covered transaction is not a qualified
                mortgage if, pursuant to Sec. 1026.43(e)(3), the transaction's total
                points and fees exceed 3 percent of the total loan amount for a loan
                amount greater than or equal to $110,260; $3,308 for a loan amount
                greater than or equal to $66,156 but less than $110,260; 5 percent of
                the total loan amount for loans greater than or equal to $22,052 but
                less than $66,156; $1,103 for a loan amount greater than or equal to
                $13,783 but less than $22,052; or 8 percent of the total loan amount
                for loans less than $13,783. The Bureau is amending comment
                43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect
                the new dollar threshold amounts for 2021.
                III. Procedural Requirements
                A. Administrative Procedure Act
                 Under the Administrative Procedure Act, notice and opportunity for
                public comment are not required if the Bureau finds that notice and
                public comment are impracticable, unnecessary, or contrary to the
                public interest.\7\ Pursuant to this final rule, in Regulation Z, Sec.
                1026.52(b)(1)(ii)(A) and (B) in subpart G is amended and comments
                32(a)(1)(ii)-1.vii and -3.vii, 43(e)(3)(ii)-1.vii, and 52(b)(1)(ii)-
                2.i.H in Supplement I are added to update the exemption thresholds. The
                amendments in this final rule are technical and non-discretionary, as
                they merely apply the method previously established in Regulation Z for
                determining adjustments to the thresholds. For these reasons, the
                Bureau has determined that publishing a notice of proposed rulemaking
                and providing opportunity for public comment are unnecessary. The
                amendments therefore are adopted in final form.
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                 \7\ 5 U.S.C. 553(b)(B).
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                B. Regulatory Flexibility Act
                 Because no notice of proposed rulemaking is required, the
                Regulatory Flexibility Act does not require an initial or final
                regulatory flexibility analysis.\8\
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                 \8\ 5 U.S.C. 603(a), 604(a).
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                C. Paperwork Reduction Act
                 In accordance with the Paperwork Reduction Act of 1995,\9\ the
                Bureau reviewed this final rule. No collections of information pursuant
                to the Paperwork Reduction Act are contained in the final rule.
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                 \9\ 44 U.S.C. 3506; 5 CFR part 1320.
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                D. Congressional Review Act
                 Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
                the Bureau will submit a report containing this rule and other required
                information to the United States Senate, the United States House of
                Representatives, and the Comptroller General of the United States prior
                to the rule taking effect. The Office of Information and Regulatory
                Affairs (OIRA) has designated this rule as not a ``major rule'' as
                defined by 5 U.S.C. 804(2).
                E. Signing Authority
                 The Acting Associate Director for Research, Markets and
                Regulations, having reviewed and approved this document, is delegating
                the authority to electronically sign this document to Laura Galban, a
                Bureau Federal Register Liaison, for purposes of publication in the
                Federal Register.
                List of Subjects in 12 CFR Part 1026
                 Advertising, Appraisal, Appraiser, Banking, Banks, Consumer
                protection, Credit, Credit unions, Mortgages, National banks, Reporting
                and recordkeeping requirements, Savings associations, Truth in lending.
                Authority and Issuance
                 For the reasons set forth in the preamble, the Bureau amends
                Regulation Z, 12 CFR part 1026, as set forth below:
                [[Page 50947]]
                PART 1026--TRUTH IN LENDING (REGULATION Z)
                0
                1. The authority citation for part 1026 continues to read as follows:
                 Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353,
                5511, 5512, 5532, 5581; 15 U.S.C. 1601 ET SEQ.
                0
                2. In Supplement I to Part 1026:
                0
                a. Under Section 1026.32--Requirements for High-Cost Mortgages, revise
                Paragraph 32(a)(1)(ii).
                0
                b. Under Section 1026.43--Minimum Standards for Transactions Secured by
                a Dwelling, revise Paragraph 43(e)(3)(ii).
                0
                c. Under Section 1026.52--Limitations on Fees, revise 52(b)(1)(ii) Safe
                harbors.
                 The revisions read as follows:
                 SUPPLEMENT I TO PART 1026--OFFICIAL INTERPRETATIONS
                * * * * *
                Section 1026.32--Requirements for High-Cost Mortgages
                * * * * *
                 Paragraph 32(a)(1)(ii).
                 1. Annual adjustment of $1,000 amount. The $1,000 figure in Sec.
                1026.32(a)(1)(ii)(B) is adjusted annually on January 1 by the annual
                percentage change in the CPI that was in effect on the preceding June
                1. The Bureau will publish adjustments after the June figures become
                available each year.
                 i. For 2015, $1,020, reflecting a 2 percent increase in the CPI-U
                from June 2013 to June 2014, rounded to the nearest whole dollar.
                 ii. For 2016, $1,017, reflecting a 0.2 percent decrease in the CPI-
                U from June 2014 to June 2015, rounded to the nearest whole dollar.
                 iii. For 2017, $1,029, reflecting a 1.1 percent increase in the
                CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.
                 iv. For 2018, $1,052, reflecting a 2.2 percent increase in the CPI-
                U from June 2016 to June 2017, rounded to the nearest whole dollar.
                 v. For 2019, $1,077, reflecting a 2.5 percent increase in the CPI-U
                from June 2017 to June 2018, rounded to the nearest whole dollar.
                 vi. For 2020, $1,099, reflecting a 2 percent increase in the CPI-U
                from June 2018 to June 2019, rounded to the nearest whole dollar.
                 vii. For 2021, $1,103, reflecting a 0.3 percent increase in the
                CPI-U from June 2019 to June 2020, rounded to the nearest whole dollar.
                 2. Historical adjustment of $400 amount. Prior to January 10, 2014,
                a mortgage loan was covered by Sec. 1026.32 if the total points and
                fees payable by the consumer at or before loan consummation exceeded
                the greater of $400 or 8 percent of the total loan amount. The $400
                figure was adjusted annually on January 1 by the annual percentage
                change in the CPI that was in effect on the preceding June 1, as
                follows:
                 i. For 1996, $412, reflecting a 3.00 percent increase in the CPI-U
                from June 1994 to June 1995, rounded to the nearest whole dollar.
                 ii. For 1997, $424, reflecting a 2.9 percent increase in the CPI-U
                from June 1995 to June 1996, rounded to the nearest whole dollar.
                 iii. For 1998, $435, reflecting a 2.5 percent increase in the CPI-U
                from June 1996 to June 1997, rounded to the nearest whole dollar.
                 iv. For 1999, $441, reflecting a 1.4 percent increase in the CPI-U
                from June 1997 to June 1998, rounded to the nearest whole dollar.
                 v. For 2000, $451, reflecting a 2.3 percent increase in the CPI-U
                from June 1998 to June 1999, rounded to the nearest whole dollar.
                 vi. For 2001, $465, reflecting a 3.1 percent increase in the CPI-U
                from June 1999 to June 2000, rounded to the nearest whole dollar.
                 vii. For 2002, $480, reflecting a 3.27 percent increase in the CPI-
                U from June 2000 to June 2001, rounded to the nearest whole dollar.
                 viii. For 2003, $488, reflecting a 1.64 percent increase in the
                CPI-U from June 2001 to June 2002, rounded to the nearest whole dollar.
                 ix. For 2004, $499, reflecting a 2.22 percent increase in the CPI-U
                from June 2002 to June 2003, rounded to the nearest whole dollar.
                 x. For 2005, $510, reflecting a 2.29 percent increase in the CPI-U
                from June 2003 to June 2004, rounded to the nearest whole dollar.
                 xi. For 2006, $528, reflecting a 3.51 percent increase in the CPI-U
                from June 2004 to June 2005, rounded to the nearest whole dollar.
                 xii. For 2007, $547, reflecting a 3.55 percent increase in the CPI-
                U from June 2005 to June 2006, rounded to the nearest whole dollar.
                 xiii. For 2008, $561, reflecting a 2.56 percent increase in the
                CPI-U from June 2006 to June 2007, rounded to the nearest whole dollar.
                 xiv. For 2009, $583, reflecting a 3.94 percent increase in the CPI-
                U from June 2007 to June 2008, rounded to the nearest whole dollar.
                 xv. For 2010, $579, reflecting a 0.74 percent decrease in the CPI-U
                from June 2008 to June 2009, rounded to the nearest whole dollar.
                 xvi. For 2011, $592, reflecting a 2.2 percent increase in the CPI-U
                from June 2009 to June 2010, rounded to the nearest whole dollar.
                 xvii. For 2012, $611, reflecting a 3.2 percent increase in the CPI-
                U from June 2010 to June 2011, rounded to the nearest whole dollar.
                 xviii. For 2013, $625, reflecting a 2.3 percent increase in the
                CPI-U from June 2011 to June 2012, rounded to the nearest whole dollar.
                 xix. For 2014, $632, reflecting a 1.1 percent increase in the CPI-U
                from June 2012 to June 2013, rounded to the nearest whole dollar.
                 3. Applicable threshold. For purposes of Sec. 1026.32(a)(1)(ii), a
                creditor must determine the applicable points and fees threshold based
                on the face amount of the note (or, in the case of an open-end credit
                plan, the credit limit for the plan when the account is opened).
                However, the creditor must apply the allowable points and fees
                percentage to the ``total loan amount,'' as defined in Sec.
                1026.32(b)(4). For closed-end credit transactions, the total loan
                amount may be different than the face amount of the note. The $20,000
                amount in Sec. 1026.32(a)(1)(ii)(A) and (B) is adjusted annually on
                January 1 by the annual percentage change in the CPI that was in effect
                on the preceding June 1.
                 i. For 2015, $20,391, reflecting a 2 percent increase in the CPI-U
                from June 2013 to June 2014, rounded to the nearest whole dollar.
                 ii. For 2016, $20,350, reflecting a .2 percent decrease in the CPI-
                U from June 2014 to June 2015, rounded to the nearest whole dollar.
                 iii. For 2017, $20,579, reflecting a 1.1 percent increase in the
                CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.
                 iv. For 2018, $21,032, reflecting a 2.2 percent increase in the
                CPI-U from June 2016 to June 2017, rounded to the nearest whole dollar.
                 v. For 2019, $21,549, reflecting a 2.5 percent increase in the CPI-
                U from June 2017 to June 2018, rounded to the nearest whole dollar.
                 vi. For 2020, $21,980, reflecting a 2 percent increase in the CPI-U
                from June 2018 to June 2019, rounded to the nearest whole dollar.
                 vii. For 2021, $22,052 reflecting a 0.3 percent increase in the
                CPI-U from June 2019 to June 2020, rounded to the nearest whole dollar.
                * * * * *
                Section 1026.43--Minimum Standards for Transactions Secured by a
                Dwelling
                * * * * *
                 Paragraph 43(e)(3)(ii).
                 1. Annual adjustment for inflation. The dollar amounts, including
                the loan amounts, in Sec. 1026.43(e)(3)(i) will be
                [[Page 50948]]
                adjusted annually on January 1 by the annual percentage change in the
                CPI-U that was in effect on the preceding June 1. The Bureau will
                publish adjustments after the June figures become available each year.
                 i. For 2015, reflecting a 2 percent increase in the CPI-U that was
                reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transactions total points and fees do not
                exceed;
                 A. For a loan amount greater than or equal to $101,953: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $61,172 but less than
                $101,953: $3,059;
                 C. For a loan amount greater than or equal to $20,391 but less than
                $61,172: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $12,744 but less than
                $20,391; $1,020;
                 E. For a loan amount less than $12,744: 8 percent of the total loan
                amount.
                 ii. For 2016, reflecting a 0.2 percent decrease in the CPI-U that
                was reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transactions total points and fees do not
                exceed;
                 A. For a loan amount greater than or equal to $101,749: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $61,050 but less than
                $101,749: $3,052;
                 C. For a loan amount greater than or equal to $20,350 but less than
                $61,050: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $12,719 but less than
                $20,350; $1,017;
                 E. For a loan amount less than $12,719: 8 percent of the total loan
                amount.
                 iii. For 2017, reflecting a 1.1 percent increase in the CPI-U that
                was reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transactions total points and fees do not
                exceed:
                 A. For a loan amount greater than or equal to $102,894: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $61,737 but less than
                $102,894: $3,087;
                 C. For a loan amount greater than or equal to $20,579 but less than
                $61,737: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $12,862 but less than
                $20,579: $1,029;
                 E. For a loan amount less than $12,862: 8 percent of the total loan
                amount.
                 iv. For 2018, reflecting a 2.2 percent increase in the CPI-U that
                was reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transaction's total points and fees do
                not exceed:
                 A. For a loan amount greater than or equal to $105,158: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $63,095 but less than
                $105,158: $3,155;
                 C. For a loan amount greater than or equal to $21,032 but less than
                $63,095: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $13,145 but less than
                $21,032: $1,052;
                 E. For a loan amount less than $13,145: 8 percent of the total loan
                amount.
                 v. For 2019, reflecting a 2.5 percent increase in the CPI-U that
                was reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transaction's total points and fees do
                not exceed:
                 A. For a loan amount greater than or equal to $107,747: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $64,648 but less than
                $107,747: $3,232;
                 C. For a loan amount greater than or equal to $21,549 but less than
                $64,648: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $13,468 but less than
                $21,549: $1,077;
                 E. For a loan amount less than $13,468: 8 percent of the total loan
                amount.
                 vi. For 2020, reflecting a 2 percent increase in the CPI-U that was
                reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transaction's total points and fees do
                not exceed:
                 A. For a loan amount greater than or equal to $109,898: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $65,939 but less than
                $109,898: $3,297;
                 C. For a loan amount greater than or equal to $21,980 but less than
                $65,939: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $13,737 but less than
                $21,980: $1,099;
                 E. For a loan amount less than $13,737: 8 percent of the total loan
                amount.
                 vii. For 2021, reflecting a 0.3 percent increase in the CPI-U that
                was reported on the preceding June 1, a covered transaction is not a
                qualified mortgage unless the transaction's total points and fees do
                not exceed:
                 A. For a loan amount greater than or equal to $110,260: 3 percent
                of the total loan amount;
                 B. For a loan amount greater than or equal to $66,156 but less than
                $110,260: $3,308;
                 C. For a loan amount greater than or equal to $22,052 but less than
                $66,156: 5 percent of the total loan amount;
                 D. For a loan amount greater than or equal to $13,783 but less than
                $22,052: $1,103;
                 E. For a loan amount less than $13,783: 8 percent of the total loan
                amount.
                * * * * *
                Section 1026.52--Limitations on Fees
                * * * * *
                52(b)(1)(ii) Safe harbors
                 1. Multiple violations of same type. i. Same billing cycle or next
                six billing cycles. A card issuer cannot impose a fee for a violation
                pursuant to Sec. 1026.52(b)(1)(ii)(B) unless a fee has previously been
                imposed for the same type of violation pursuant to Sec.
                1026.52(b)(1)(ii)(A). Once a fee has been imposed for a violation
                pursuant to Sec. 1026.52(b)(1)(ii)(A), the card issuer may impose a
                fee pursuant to Sec. 1026.52(b)(1)(ii)(B) for any subsequent violation
                of the same type until that type of violation has not occurred for a
                period of six consecutive complete billing cycles. A fee has been
                imposed for purposes of Sec. 1026.52(b)(1)(ii) even if the card issuer
                waives or rebates all or part of the fee.
                 A. Late payments. For purposes of Sec. 1026.52(b)(1)(ii), a late
                payment occurs during the billing cycle in which the payment may first
                be treated as late consistent with the requirements of this part and
                the terms or other requirements of the account.
                 B. Returned payments. For purposes of Sec. 1026.52(b)(1)(ii), a
                returned payment occurs during the billing cycle in which the payment
                is returned to the card issuer.
                 C. Transactions that exceed the credit limit. For purposes of Sec.
                1026.52(b)(1)(ii), a transaction that exceeds the credit limit for an
                account occurs during the billing cycle in which the transaction occurs
                or is authorized by the card issuer.
                 D. Declined access checks. For purposes of Sec. 1026.52(b)(1)(ii),
                a check that accesses a credit card account is declined during the
                billing cycle in which the card issuer declines payment on the check.
                 ii. Relationship to Sec. Sec. 1026.52(b)(2)(ii) and 1026.56(j)(1).
                If multiple violations are based on the same event or transaction such
                that Sec. 1026.52(b)(2)(ii) prohibits the card issuer from imposing
                [[Page 50949]]
                more than one fee, the event or transaction constitutes a single
                violation for purposes of Sec. 1026.52(b)(1)(ii). Furthermore,
                consistent with Sec. 1026.56(j)(1)(i), no more than one violation for
                exceeding an account's credit limit can occur during a single billing
                cycle for purposes of Sec. 1026.52(b)(1)(ii). However, Sec.
                1026.52(b)(2)(ii) does not prohibit a card issuer from imposing fees
                for exceeding the credit limit in consecutive billing cycles based on
                the same over-the-limit transaction to the extent permitted by Sec.
                1026.56(j)(1). In these circumstances, the second and third over-the-
                limit fees permitted by Sec. 1026.56(j)(1) may be imposed pursuant to
                Sec. 1026.52(b)(1)(ii)(B). See comment 52(b)(2)(ii)-1.
                 iii. Examples. The following examples illustrate the application of
                Sec. 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) with respect to credit
                card accounts under an open-end (not home-secured) consumer credit plan
                that are not charge card accounts. For purposes of these examples,
                assume that the billing cycles for the account begin on the first day
                of the month and end on the last day of the month and that the payment
                due date for the account is the twenty-fifth day of the month.
                 A. Violations of same type (late payments). A required minimum
                periodic payment of $50 is due on March 25. On March 26, a late payment
                has occurred because no payment has been received. Accordingly,
                consistent with Sec. 1026.52(b)(1)(ii)(A), the card issuer imposes a
                $25 late payment fee on March 26. In order for the card issuer to
                impose a $35 late payment fee pursuant to Sec. 1026.52(b)(1)(ii)(B), a
                second late payment must occur during the April, May, June, July,
                August, or September billing cycles.
                 1. The card issuer does not receive any payment during the March
                billing cycle. A required minimum periodic payment of $100 is due on
                April 25. On April 20, the card issuer receives a $50 payment. No
                further payment is received during the April billing cycle.
                Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(B), the card
                issuer may impose a $35 late payment fee on April 26. Furthermore, the
                card issuer may impose a $35 late payment fee for any late payment that
                occurs during the May, June, July, August, September, or October
                billing cycles.
                 2. Same facts as in paragraph A above. On March 30, the card issuer
                receives a $50 payment and the required minimum periodic payments for
                the April, May, June, July, August, and September billing cycles are
                received on or before the payment due date. A required minimum periodic
                payment of $60 is due on October 25. On October 26, a late payment has
                occurred because the required minimum periodic payment due on October
                25 has not been received. However, because this late payment did not
                occur during the six billing cycles following the March billing cycle,
                Sec. 1026.52(b)(1)(ii) only permits the card issuer to impose a late
                payment fee of $25.
                 B. Violations of different types (late payment and over the credit
                limit). The credit limit for an account is $1,000. Consistent with
                Sec. 1026.56, the consumer has affirmatively consented to the payment
                of transactions that exceed the credit limit. A required minimum
                periodic payment of $30 is due on August 25. On August 26, a late
                payment has occurred because no payment has been received. Accordingly,
                consistent with Sec. 1026.52(b)(1)(ii)(A), the card issuer imposes a
                $25 late payment fee on August 26. On August 30, the card issuer
                receives a $30 payment. On September 10, a transaction causes the
                account balance to increase to $1,150, which exceeds the account's
                $1,000 credit limit. On September 11, a second transaction increases
                the account balance to $1,350. On September 23, the card issuer
                receives the $50 required minimum periodic payment due on September 25,
                which reduces the account balance to $1,300. On September 30, the card
                issuer imposes a $25 over-the-limit fee, consistent with Sec.
                1026.52(b)(1)(ii)(A). On October 26, a late payment has occurred
                because the $60 required minimum periodic payment due on October 25 has
                not been received. Accordingly, consistent with Sec.
                1026.52(b)(1)(ii)(B), the card issuer imposes a $35 late payment fee on
                October 26.
                 C. Violations of different types (late payment and returned
                payment). A required minimum periodic payment of $50 is due on July 25.
                On July 26, a late payment has occurred because no payment has been
                received. Accordingly, consistent with Sec. 1026.52(b)(1)(ii)(A), the
                card issuer imposes a $25 late payment fee on July 26. On July 30, the
                card issuer receives a $50 payment. A required minimum periodic payment
                of $50 is due on August 25. On August 24, a $50 payment is received. On
                August 27, the $50 payment is returned to the card issuer for
                insufficient funds. In these circumstances, Sec. 1026.52(b)(2)(ii)
                permits the card issuer to impose either a late payment fee or a
                returned payment fee but not both because the late payment and the
                returned payment result from the same event or transaction.
                Accordingly, for purposes of Sec. 1026.52(b)(1)(ii), the event or
                transaction constitutes a single violation. However, if the card issuer
                imposes a late payment fee, Sec. 1026.52(b)(1)(ii)(B) permits the
                issuer to impose a fee of $35 because the late payment occurred during
                the six billing cycles following the July billing cycle. In contrast,
                if the card issuer imposes a returned payment fee, the amount of the
                fee may be no more than $25 pursuant to Sec. 1026.52(b)(1)(ii)(A).
                 2. Adjustments based on Consumer Price Index. For purposes of Sec.
                1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B), the Bureau shall calculate each
                year price level adjusted amounts using the Consumer Price Index in
                effect on June 1 of that year. When the cumulative change in the
                adjusted minimum value derived from applying the annual Consumer Price
                level to the current amounts in Sec. 1026.52(b)(1)(ii)(A) and
                (b)(1)(ii)(B) has risen by a whole dollar, those amounts will be
                increased by $1.00. Similarly, when the cumulative change in the
                adjusted minimum value derived from applying the annual Consumer Price
                level to the current amounts in Sec. 1026.52(b)(1)(ii)(A) and
                (b)(1)(ii)(B) has decreased by a whole dollar, those amounts will be
                decreased by $1.00. The Bureau will publish adjustments to the amounts
                in Sec. 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B).
                 i. Historical thresholds. A. Card issuers were permitted to impose
                a fee for violating the terms of an agreement if the fee did not exceed
                $25 under Sec. 1026.52(b)(1)(ii)(A) and $35 under Sec.
                1026.52(b)(1)(ii)(B), through December 31, 2013.
                 B. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $26 under Sec.
                1026.52(b)(1)(ii)(A) and $37 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2014.
                 C. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $27 under Sec.
                1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2015.
                 D. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $27 under Sec.
                1026.52(b)(1)(ii)(A), through December 31, 2016. Card issuers were
                permitted to impose a fee for violating the terms of an agreement if
                the fee did not exceed $37 under Sec. 1026.52(b)(1)(ii)(B), through
                June 26, 2016, and $38 under Sec. 1026.52(b)(1)(ii)(B) from June 27,
                2016 through December 31, 2016.
                 E. Card issuers were permitted to impose a fee for violating the
                terms of
                [[Page 50950]]
                an agreement if the fee did not exceed $27 under Sec.
                1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2017.
                 F. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $27 under Sec.
                1026.52(b)(1)(ii)(A) and $38 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2018.
                 G. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $28 under Sec.
                1026.52(b)(1)(ii)(A) and $39 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2019.
                 H. Card issuers were permitted to impose a fee for violating the
                terms of an agreement if the fee did not exceed $29 under Sec.
                1026.52(b)(1)(ii)(A) and $40 under Sec. 1026.52(b)(1)(ii)(B), through
                December 31, 2020.
                 3. Delinquent balance for charge card accounts. Section
                1026.52(b)(1)(ii)(C) provides that, when a charge card issuer that
                requires payment of outstanding balances in full at the end of each
                billing cycle has not received the required payment for two or more
                consecutive billing cycles, the card issuer may impose a late payment
                fee that does not exceed three percent of the delinquent balance. For
                purposes of Sec. 1026.52(b)(1)(ii)(C), the delinquent balance is any
                previously billed amount that remains unpaid at the time the late
                payment fee is imposed pursuant to Sec. 1026.52(b)(1)(ii)(C).
                Consistent with Sec. 1026.52(b)(2)(ii), a charge card issuer that
                imposes a fee pursuant to Sec. 1026.52(b)(1)(ii)(C) with respect to a
                late payment may not impose a fee pursuant to Sec.
                1026.52(b)(1)(ii)(B) with respect to the same late payment. The
                following examples illustrate the application of Sec.
                1026.52(b)(1)(ii)(C):
                 i. Assume that a charge card issuer requires payment of outstanding
                balances in full at the end of each billing cycle and that the billing
                cycles for the account begin on the first day of the month and end on
                the last day of the month. At the end of the June billing cycle, the
                account has a balance of $1,000. On July 5, the card issuer provides a
                periodic statement disclosing the $1,000 balance consistent with Sec.
                1026.7. During the July billing cycle, the account is used for $300 in
                transactions, increasing the balance to $1,300. At the end of the July
                billing cycle, no payment has been received and the card issuer imposes
                a $25 late payment fee consistent with Sec. 1026.52(b)(1)(ii)(A). On
                August 5, the card issuer provides a periodic statement disclosing the
                $1,325 balance consistent with Sec. 1026.7. During the August billing
                cycle, the account is used for $200 in transactions, increasing the
                balance to $1,525. At the end of the August billing cycle, no payment
                has been received. Consistent with Sec. 1026.52(b)(1)(ii)(C), the card
                issuer may impose a late payment fee of $40, which is 3% of the $1,325
                balance that was due at the end of the August billing cycle. Section
                1026.52(b)(1)(ii)(C) does not permit the card issuer to include the
                $200 in transactions that occurred during the August billing cycle.
                 ii. Same facts as above except that, on August 25, a $100 payment
                is received. Consistent with Sec. 1026.52(b)(1)(ii)(C), the card
                issuer may impose a late payment fee of $37, which is 3% of the unpaid
                portion of the $1,325 balance that was due at the end of the August
                billing cycle ($1,225).
                 iii. Same facts as in paragraph A above except that, on August 25,
                a $200 payment is received. Consistent with Sec. 1026.52(b)(1)(ii)(C),
                the card issuer may impose a late payment fee of $34, which is 3% of
                the unpaid portion of the $1,325 balance that was due at the end of the
                August billing cycle ($1,125). In the alternative, the card issuer may
                impose a late payment fee of $35 consistent with Sec.
                1026.52(b)(1)(ii)(B). However, Sec. 1026.52(b)(2)(ii) prohibits the
                card issuer from imposing both fees.
                * * * * *
                 Dated: July 17, 2020.
                Laura Galban,
                Federal Register Liaison, Bureau of Consumer Financial Protection.
                [FR Doc. 2020-15900 Filed 8-18-20; 8:45 am]
                BILLING CODE 4810-AM-P
                

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