Alert November 27, 2012

CFPB and FRB Announce Dollar Threshold for Exempt Transactions under Regulations Z and M

As required by the Dodd-Frank Act, the CFPB and the FRB announced increases to the dollar threshold for exempt transactions under Regulation Z, the Truth in Lending Act’s implementing regulation, and Regulation M, the Consumer Leasing Act's implementing regulation. Dodd-Frank increased the threshold for exempt transactions from $25,000 to $50,000 and required that the threshold be adjusted annually for inflation, measured by the annual percentage increase in the Consumer Price Index. Effective January 1, 2013, Regulation Z and Regulation M will cover consumer credit transactions and consumer lease transactions, respectively, of $53,000 or less. Currently, Regulation Z and Regulation M cover transactions of $51,800 or less. The dollar threshold in Regulation Z does not apply to real estate transactions or student loan transactions, which are subject to Regulation Z regardless of the transaction dollar amount.

The CFPB also increased the fee trigger for protection under the Home Ownership and Equity Protection Act of 1994 from $611 to $625 for 2013. As a result of the adjustment, the HOEPA provisions of Regulation Z will apply to loans in which the total points and fees exceed the greater of $625 or 8% of the total loan amount.