CFPB Announces 2018 Regulation Z Thresholds


The Consumer Financial Protection Bureau (CFPB) announced its annual adjustments to the dollar amounts of various thresholds under the Truth in Lending Act (TILA) regulations that will apply to certain consumer credit transactions in 2018. The 2018 thresholds are as follows:

Section 1026.32 – Requirements for High-Cost Mortgages
A loan can be classified as a high-cost mortgage based on one of three independent triggers. Among these are the points and fees charged in connection with the transaction. Beginning January 1, 2018, a loan will be classified as high cost if the total points and fees charged in connection with the transaction exceed:

  • Five percent of the loan amount for loans greater than $21,032; or
  • For loans of less than $21,032, the lesser of eight percent of the loan amount or $1,052.

Section 1026.52 – Limitation on Fees (Credit Cards)
Section 1026.52 of Regulation Z establishes a safe harbor for the imposition of penalty fees in association with credit card accounts. A credit union is considered to be compliant with Section 1026.52 so long as their penalty fees do not exceed the following amounts:

  • $27 for a first violation
  • $38 for a subsequent violation

These thresholds remain unchanged from their current 2017 levels.

Section 1026.43 – Ability to Repay / Qualified Mortgages
One way in which a credit union may satisfy the ability to repay requirements of Regulation Z is to originate the loan as a qualified mortgage (QM). A QM has very specific requirements, including a limitation on the points and fees charged in connection with the transaction. Beginning January 1, 2018, the points and fees limits will be as follows:

  • Three percent of the total loan amount for loans of greater than $105,158
  • $3,155 for loans between $63,095 and $105,158
  • Five percent of the total loan amount for loans between $21,032 and $63,095
  • $1,052 for loans between $13,145 and $21,032
  • Eight percent of the total loan amount for loans of less than $13,145

Question of the Week

Can a credit union put a hold on funds from a deposited check after the date of deposit if there is reason to believe the check will not clear?

Yes, a hold can be placed if the credit union has reasonable cause to believe it will not have the ability to collect on the deposited check. Reasonable cause requires that facts exist that would cause a well-grounded belief by a reasonable person.

If there is reasonable cause and the credit union puts a hold on the funds, the credit union must provide the depositor with written notice, generally at the time of deposit. However, if the credit union becomes aware of information after the check is deposited causing them to doubt that the check will clear, the credit union can mail or deliver the notice within the first business day following the day the facts become known. The notice must include:

  • A number or code, not to exceed four digits that identifies the customer’s account;
  • The date of the deposit;
  • The amount of the deposit that is being delayed;
  • The reason the exception was invoked; and
  • The time period within which the funds will be available for withdrawal.

Resources: 12 CFR 229.13

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA released the Third Quarter 2017 issue of The NCUA Report and subsequently announced that the newsletter is moving to online distribution only.

NCUA Board member Rick Metsger delivered remarks at the NASCUS annual summit. Metsger’s remarks focused on the agency’s proposal to close the Temporary Corporate Credit Union Stabilization Fund and make a Share Insurance distribution in 2018.

Consumer Financial Protection Bureau (CFPB)

The CFPB and FinCEN issued a Memorandum on Financial Institution and Law Enforcement Efforts to Combat Elder Financial Exploitation.

The CFPB announced that it has made its annual adjustment to TILA for certain credit transactions. The adjustments include total loan amount and points and fees dollar trigger for HEOPA loans, maximum points and fees under qualified mortgages, and the minimum interest charge and safe harbor penalty fees under TILA and the CARD Act.

The CFPB issued a summary of changes and clarifications to the final TRID rule.

Federal Reserve Board (FRB)

The FRB announced the adoption of a final rule that will require global systemically important banking institutions (GSIBs) to amend qualified financial contracts to prevent immediate cancellation or termination if the GSIB enters bankruptcy or a resolution process.

Department of Labor (DOL)

The DOL announced the extension of the transition period and delay of applicability dates for its fiduciary rule. The new transition period would end on July 1, 2019.

Federal Deposit Insurance Corporation (FDIC)

The FDIC released its Summer 2017 Supervisory Insights. This issue includes articles on community bank liquidity risk and a supervisory update to the BSA.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of August 29, 2017. The last update prior to this was August 22, 2017.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.