CFPB Announces Regulation Z Threshold Adjustments for 2024

On September 18th, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending several thresholds found within Regulation Z. These adjustments are required on an annual basis to account for inflation. You can access a copy of the final rule here.

High-Cost Mortgages

A high-cost mortgage is a consumer credit transaction secured by the borrower's principal dwelling that meets one of three criteria. One of these has to do with the amount of points and fees charged in connection with the transaction. Effective next year, the points and fees thresholds for a high-cost mortgage will be as follows:

• 5% of the loan amount for loans of $26,092 or greater
• For loans less than $26,092, the lesser of -
• 8% of the loan amount, or
• $1,305

Qualified Mortgage Pricing Test

A qualified mortgage (QM), as defined by Regulation Z, must meet four criteria. The first of these is a pricing test, which considers the spread between the APR charged in connection with the transaction and the value of the Average Prime Offer Rate (APOR) index. Beginning January 1, 2024, the QM pricing test will be as follows:

First Lien Loans

The APR charged in connection with the transaction does not exceed the current value of the APOR index by more than:

• 2.25% for loans greater than or equal to $130,461
• 3.50% for loans greater than or equal to $78,277 but less than $130,461
• 6.50% for loans less than $78,277

Subordinate Lien Loans

The APR charged in connection with the transaction does not exceed the current value of the APOR index by more than:

• 3.50% for loans greater than or equal to $78,277
• 6.50% for loans less than $78,277

Qualified Mortgage Points and Fees Test

Another test for a QM considers the points and fees charged in connection with the transaction. Effective next year, the points and fees charged in connection with a QM may not exceed the following thresholds: