United States: Exemption Thresholds Adjusted For Some Regulations

Last Updated: April 28 2017
Article by Memrie M. Fortenberry

A number of compliance-related regulations have threshold amounts below which institutions are exempt from compliance requirements. The applicable regulatory agency is often required to adjust the threshold levels annually by the percentage increase in the Consumer Price Index.

HMDA/Reg. C. The CFPB did not adjust the asset-size exemption threshold in 2016 for banks, savings associations and credit unions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The asset-size exemption will remain at $44 million. Institutions with assets of $44 million or less as of December 31, 2015 are exempt from collecting HMDA data in 2016.

TILA/Reg. Z. Effective January 1, 2016, the CFPB adjusted the asset-size exemption threshold under Regulation Z, which implements the Truth in Lending Act. The asset-size threshold for certain creditors to qualify for an exemption to the requirements to establish an escrow account for a higher-priced mortgage loan is adjusted to decrease from $2.060 billion or less to $2.052 billion. Small creditors with assets of $2.052 billion or less as of December 31, 2015, are exempt from establishing escrow accounts for first lien higher-priced mortgage loans in 2016, assuming other requirements for the exemption under Regulation Z are also met. The adjustment to this asset-size threshold will also decrease a similar threshold applicable to small-creditor portfolio and balloon-payment qualified mortgages and the temporary balloon payment QM exception during the grace period with respect to applications received before April 1, 2017. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that do not exceed the asset-size threshold, are also excepted from the prohibition against balloon payments for high-cost mortgages.

On November 25, 2015, the CFPB, the Federal Reserve and the OCC announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2016 will not be adjusted and remain at $25,500 effective January 1, 2016. Creditors are required to obtain a written appraisal based on a physical visit of a home's interior before making a higher-priced mortgage loan.

Also, on November 25, 2015, the Fed and CFPB announced that the exemption threshold for coverage of consumer credit under Reg. Z will not change and will remain at $54,600 through the end of 2016. Consumer credit in excess of $54,600 is exempt from Reg. Z unless it is a private education loan or the credit is secured by any real property or by personal property used as the consumer's principal dwelling.

On September 22, the CFPB announced the total loan amount threshold for determining whether a transaction is a high cost mortgage when the points and fees payable by the consumer at or before consummation or account opening are 5% or 8% of that amount. The thresholds decreased from $20,391 to $20,350 and $1,020 and $1,017 effective January 1, 2016.

The CFPB also announced annual adjustments to provisions of the CARD Act effective January 1, 2016. The threshold triggering disclosures of the minimum interest charge in credit card applications, solicitations and account opening disclosures remains at $1.00. The current penalty fee safe harbor amount for the first late payment remained unchanged at $27; however, the safe harbor for a subsequent violation within the following six months was decreased from $38 to $37.

Effective January 1, 2016, the points and fees limits that must be met for a covered transaction to be deemed a qualified mortgage are as follows:

  • For a loan amount greater than or equal to $101,749: 3% of the total loan amount;
  • For a loan amount greater than or equal to $61,050, but less than $101,749: $3,052;
  • For a loan amount greater than or equal to $20,350, but less than $61,050: 5% of the total loan amount;
  • For a loan amount greater than or equal to $12,719, but less than $20,350: $1,017;
  • For a loan amount less than $12,719: 8% of the total loan amount.

CRA. On December 22, 2015, the Federal Reserve, the FDIC and the OCC announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the CRA. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate asset size threshold are not subject to the reporting requirements applicable to large banks and savings associations. An institution is considered a small bank or small savings association if, as of December 31 of either of the prior two calendar years, it had assets of less than $1.216 billion. Intermediate small banks or intermediate small savings associations are institutions with assets of at least $30 million as of December 31 of both of the prior two calendar years and less than $1.216 billion as of December 31 of either of the two prior calendar years. The asset-size threshold adjustments were effective January 1, 2016.

Consumer Leasing Act/Reg. M). On November 25, 2015, the Fed and the CFPB announced that the threshold under Regulation M used for determining exempt consumer lease transactions will not change and the protections provided will apply to leases in amounts of $54,600 or less in 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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