On November 18, 2020 the Consumer Financial Protection Bureau (“CFPB”) published three final rules adjusting certain thresholds under both Regulation M and Regulation Z.
Consumer Leasing Act / Regulation M
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the Consumer Leasing Act (CLA) to require that the dollar threshold for exempt consumer leases be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the exemption threshold is not adjusted for that year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account.
Effective January 1, 2021, the exemption threshold amount remains at $58,300. This amount is based on the CPI-W in effect on June 1, 2020, which was reported on May 12, 2020.
Truth in Lending Act / Regulation Z - Exempt Consumer Credit
The Dodd-Frank Act amended the Truth in Lending Act (TILA) to require that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the CPI-W. As explained above, if there is no annual percentage increase in the CPI-W, the exemption threshold is not adjusted from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account.
Based on the annual percentage increase in the CPI-W as of June 1, 2020, the exemption threshold will remain at $58,300 effective January 1, 2021. This amount is based on the CPI-W in effect on June 1, 2020, which was reported on May 12, 2020.
Truth in Lending Act / Regulation Z – Appraisals for HPMLs
The Dodd-Frank Act amended the TILA to add special appraisal requirements for loans defined as higher-priced mortgage loans (HPML) in the regulations. The OCC, the Federal Reserve Board, the CFPB, the FDIC, the NCUA, and the FHFA, (collectively, the Agencies) previously issued joint final rules implementing these requirements. Among other exemptions adopted in supplemental final rules, the Agencies adopted an exemption from the new HPML appraisal rules for transactions of $25,000 or less, to be adjusted annually for inflation. If there is no annual percentage increase in the CPI-W, the Agencies will not adjust this exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage increase in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account.
Effective January 1, 2021, the exemption threshold amount remains at $27,200. This amount is based on the CPI-W in effect on June 1, 2020, which was reported on May 12, 2020.
The final rules can be found here:
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