CFPB’s Annual Regulation Z Threshold Adjustments

The Consumer Financial Protection Bureau issued final rule amendments to implement the annual Regulation Z threshold adjustments. The final rule revises the dollar amounts for the CARD Act, HOEPA, and Ability to Repay Qualified Mortgage provisions.

The threshold adjustments take effect on Jan. 1, 2022.

The safe harbor for credit card penalty fees increases to $30 for the first violation of an account term, and to $41 if the card issuer previously imposed a fee for a violation of the same type within the past six billing cycles.

For HOEPA loans, the changes look at the transactions’ total points and fees that would determine if the loan is a high-cost mortgage loan. For 2022, the amounts will be:

  • 5% of the total loan amount for a transaction with a loan amount of $22,969 or more; or
  • The lesser of 8% of the total loan amount or $1,148 for a transaction with a loan amount of less than $22,969.

The change for qualified mortgages applies both the comparison to APOR and the limitation on points and fees.

The threshold the annual percentage rate may not exceed the average prime offer in order for the covered transaction to still be a qualified mortgage loan is set by the following amounts:

  1. For a first-lien covered transaction with a loan amount greater than or equal to $114,847, 2.25 or more percentage points;
  2. For a first-lien covered transaction with a loan amount greater than or equal to $68,908 but less than $114,847, 3.5 or more percentage points;
  3. For a first-lien covered transaction with a loan amount less than $68,908, 6.5 or more percentage points;
  4. For a first-lien covered transaction secured by a manufactured home with a loan amount less than $114,847, 6.5 or more percentage points;
  5. For a subordinate-lien covered transaction with a loan amount greater than or equal to $68,908, 3.5 or more percentage points;
  6. For a subordinate-lien covered transaction with a loan amount less than $68,908, 6.5 or more percentage points.

A covered transaction is not a qualified mortgage loan unless the transaction’s total points and fees do not exceed:

  1. For a loan amount greater than or equal to $114,847: 3 percent of the total loan amount;
  2. For a loan amount greater than or equal to $68,908 but less than $114,847: $3,445;
  3. For a loan amount greater than or equal to $22,969 but less than $68,908: 5 percent of the total loan amount;
  4. For a loan amount greater than or equal to $14,356 but less than $22,969: $1,148;
  5. For a loan amount less than $14,356: 8 percent of the total loan amount.

Question of the Week

Q. How do we assist a potential member who has no Social Security number and is not eligible for one?

A. A potential member without a Social Security Number may apply for individual taxpayer identification numbers (ITINs), and the credit union may use this number to open an account. ITINs are issued by the IRS typically to non-residents or others who do not have and are not eligible to get a social security number but must file a tax return. ITINs are for tax purposes only and are used on forms, statements, and other tax documents. The ITIN is used just like a social security number (SSN). It begins with the number “9” and is formatted like an SSN (9NN-NN-NNNN).

By obtaining an ITIN, a non-resident does not change his or her employment or immigration status.

An individual applies for an ITIN by completing Form W-7, Application for IRS Individual Taxpayer Identification Number. In addition to completing Form W-7, the non-resident must provide documentation substantiating foreign/alien status and his or her true identity, such as a passport. It takes about six to eight weeks to receive the ITIN.

A non-resident may or may not obtain a TIN. A TIN is not required on the W-8BEN; however, the non-resident may want to get one anyway. If the foreign individual does not have an ITIN or is a non-resident, a Form W-8BEN can be completed to exempt the individual from backup withholding.

If an individual does not have an ITIN, the w-8BEN expires every three years. This means that the credit union will have to get a new W-8BEN after its expiration. If the credit union does not get a new W-8BEN, then the credit union will have to start backup withholding.

Related Links

IRS Form W-7
IRS ITIN FAQ

Compliance Alerts

Consumer Financial Protection Bureau

2022 Regulation Z Threshold Adjustments: The CFPB released the annual Regulation Z threshold adjustments. The adjusts are for the Credit Card Act, HOEPA, and Ability to Repay QM requirements.

Financial Crimes Enforcement Network

FinCEN Renews Real Estate Geographic Targeting Orders for 12 Metro Areas: FinCEN announced the renewal of Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. The GTOs cover certain counties within the following major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.

Office of Foreign Assets Control

OFAC has updated the SDN list as of Oct. 29. The last update prior to this was Oct. 26.­­­­­­­­­­­­­­­­­­­

Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance, Compliance News, Compliance Question.