Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)

<RULE> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1026</CFR> <SUBJECT>Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Final rule; official interpretation. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (Bureau) is issuing this final rule amending the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau calculates the dollar amounts for provisions in Regulation Z annually; this final rule revises the amounts for provisions implementing TILA and its amendments, including the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Bureau adjusts these amounts based on the annual percentage change of the Consumer Price Index (CPI) as of June 1, 2025. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective January 1, 2026. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal Specialist, Office of Regulations, at 202-435-7700 or at: <E T="03">https://reginquiries.consumerfinance.gov/</E> . If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov</E> . </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> The Bureau is amending the regulation text and official interpretations for Regulation Z, which implements TILA, to update the dollar amounts of various thresholds that it must adjust annually to reflect the annual percentage change in the CPI as published by the Bureau of Labor Statistics (BLS). Specifically, for open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00 in 2026. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2026 will be $27,592. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2026 will be $1,380. For qualified mortgages (QMs) under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR)  <SU>1</SU> <FTREF/> in 2026 will be: 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $137,958; 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $82,775 but less than $137,958; 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $82,775; 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $137,958; 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $82,775; or 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $82,775. For all categories of QMs, the thresholds for total points and fees in 2026 will be 3 percent of the total loan amount for a loan greater than or equal to $137,958; $4,139 for a loan amount greater than or equal to $82,775 but less than $137,958; 5 percent of the total loan amount for a loan greater than or equal to $27,592 but less than $82,775; $1,380 for a loan amount greater than or equal to $17,245 but less than $27,592; and 8 percent of the total loan amount for a loan amount less than $17,245. <SU>2</SU> <FTREF/> <FTNT> <SU>1</SU>  On April 20, 2023, the Bureau published a document announcing the availability of a revised version of its “Methodology for Determining Average Prime Offer Rates,” which describes the data and methodology used to calculate the average prime offer rate for purposes of Regulation C and Regulation Z. <E T="03">See</E> 88 FR 24393. The methodology statement was revised to address the imminent unavailability of certain data the Bureau previously relied on to calculate average prime offer rates, as a result of a decision by Freddie Mac to make changes to its Primary Mortgage Market Survey® (PMMS). After evaluating potential sources, the Bureau determined that data from Intercontinental Exchange Mortgage Technology (ICE Mortgage Technology) is currently the most suitable option to replace PMMS. Beginning on April 24, 2023, the Bureau started using data provided by ICE Mortgage Technology and the revised methodology to calculate average prime offer rates. </FTNT> <FTNT> <SU>2</SU>  The QM categories in Regulation Z appear at 12 CFR 1026.43(e)(2), (e)(4), (e)(5), (e)(6), and (e)(7). Note that 12 CFR 1026.43(e)(6) applies only to covered transactions for which the application was received before April 1, 2016. </FTNT> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. Credit Card Annual Adjustments</HD> <HD SOURCE="HD3">Minimum Interest Charge Disclosure Thresholds</HD> Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) require creditors to disclose any minimum interest charge exceeding $1.00 that could be imposed during a billing cycle. These provisions also state that, for open-end consumer credit plans, the Bureau shall calculate the minimum interest charge thresholds annually using the CPI that was in effect on the preceding June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for this adjustment. <SU>3</SU> <FTREF/> If the cumulative change in the adjusted minimum value derived from applying the annual CPI-W level to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) has risen by a whole dollar, the Bureau will increase the minimum interest charge amounts set forth in the regulation by $1.00. The Bureau bases its 2026 adjustment analysis on the CPI-W index in effect on June 1, 2025, as reported by BLS on May 13, 2025. <SU>4</SU> <FTREF/> As a result, the adjustment reflects the percentage change in the CPI-W from April 2024 to April 2025. The adjustment analysis accounts for a 2.1 percent increase in the CPI-W from April 2024 to April 2025. This increase in the CPI-W when applied to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) does not trigger an increase in the minimum interest charge threshold of at least $1.00, and the Bureau, therefore, is not amending §§ 1026.6(b)(2)(iii) and 1026.60(b)(3). <FTNT> <SU>3</SU>  The CPI-W is a subset of the Consumer Price Index for All Urban Consumers (CPI-U) index and represents approximately 30 percent of the U.S. population. </FTNT> <FTNT> <SU>4</SU>  BLS publishes Consumer Price Indices monthly, usually in the middle of each calendar month. Thus, the CPI-W reported on May 13, 2025, was the most current as of June 1, 2025. </FTNT> <HD SOURCE="HD2">B. HOEPA Annual Threshold Adjustments</HD> Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431 of the Dodd-Frank Act, <SU>5</SU> <FTREF/> which amended the HOEPA points-and-fees coverage test. Under § 1026.32(a)(1)(ii)(A) and (B), in assessing whether a transaction is a high-cost mortgage due to points and fees the creditor is charging, the applicable points-and-fees coverage test depends on whether the total loan amount is for $20,000 or more, or for less than $20,000. Section 1026.32(a)(1)(ii) provides that the Bureau recalculate this threshold amount annually using the CPI index in effect on the preceding June 1; the Bureau uses the CPI-U for this adjustment. <SU>6</SU> <FTREF/> The Bureau bases the 2026 adjustment on the CPI-U index in effect on June 1, 2025, as reported by BLS on May 13, 2025. As a result, the adjustment reflects the percentage change in the CPI-U from April 2024 to April 2025, which is an increase of 2.3 percent. The adjustment to $27,592 here reflects the 2.3 percent increase in the CPI-U index from April 2024 to April 2025 rounded to the nearest whole dollar amount for ease of compliance. <SU>7</SU> <FTREF/> <FTNT> <SU>5</SU>  Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010). </FTNT> <FTNT> <SU>6</SU>  The CPI-U is based on all urban consumers and represents approximately 93 percent of the U.S. population. </FTNT> <FTNT> <SU>7</SU>  Adjusted dollar amounts throughout this final rule are calculated by applying the relevant consumer price index to the previous year's unrounded dollar amount before rounding to the nearest whole dollar. Accordingly, applying the rounded consumer price index figures to the previous year's rounded dollar amounts may not add up to the total dollar amount shown. </FTNT> Under § 1026.32(a)(1)(ii)(B), the HOEPA points-and-fees threshold is the lesser of 8 percent of the total loan amount or $1,000. Section 1026.32(a)(1)(ii)(B) provides that the Bureau will recalculate the dollar amount threshold annually using the CPI index in effect on the preceding June 1; the Bureau uses the CPI-U for this adjustment. The Bureau bases the 2026 adjustment on the CPI-U index in effect on June 1, 2025, as reported by BLS on May 13, 2025. As a result, the adjustment reflects the percentage change in CPI-U from April 2024 to April 2025, which is an increase of 2.3 percent. The adjustment to $1,380 here reflects the 2.3 percent increase in the CPI-U index from April 2024 to April 2025 rounded to the nearest whole dollar amount for ease of compliance. <HD SOURCE="HD2">C. QM Annual Threshold Adjustments</HD> The Bureau's Regulation Z implements sections 1411 and 1412 of the Dodd-Frank Act, which generally require creditors to make a reaso ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 51k characters. 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