In This Economy?? - WST

Just as inflation has changed many things for all of us in the last year, we see that even regulations are not immune to adjustments due to changes in the Consumer Price Index. The following changes to some noteworthy regulatory thresholds were effective on January 1, 2023.

Community Reinvestment Act Asset-Size Thresholds
The Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) amended their Community Reinvestment Act (CRA) regulations to adjust the asset-size thresholds used to define “small bank” and “intermediate small bank”. The definition of Small bank means an institution, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion. An Intermediate small bank means a small bank with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years.

Home Mortgage Disclosure Act (Regulation C) Adjustment to Asset-Size Exemption Threshold
The Consumer Financial Protection Bureau (CFPB) adjusted the exemption threshold to $54 million from $50 million for HMDA applicability. Therefore, banks, savings associations, and credit unions with assets of $54 million or less as of December 31, 2022, are exempt from collecting data in 2023. This doesn’t change the reporting for 2022 if previously required.

Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Thresholds
The CFPB also adjusted the asset-size for financial institutions that are exempt creditors from the requirements to establish an escrow account for a higher-priced mortgage loan (HPML). The exemption threshold for creditors and their affiliates that regularly extended covered transactions secured by first liens is adjusted to $2.537 billion from $2.336 billion; therefore, financial institutions with assets less than this amount as of YE 2022 are exempt from establishing escrow accounts for HPMLs in 2023. At this same time, the threshold requirement set for certain banks with assets of $10 billion or less, and who meet other criteria established in the regulation, was raised to $11.374 billion from $10.473 billion.

Threshold adjustments were also made to other sections of Reg Z, including the dollar threshold exemption for consumer credit transactions from $61,000 to $66,400, and the appraisal exemption threshold for higher-priced mortgage loans from $28,500 to $31,000. There were also multiple threshold adjustments made to HOEPA (Home Ownership & Equity Protection Act) loans – too many to reference in this compliance tip, but which can be found at https://www.federalregister.gov/documents/2022/12/23/2022-28023/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified.

We encourage your compliance staff to review the above and visit the CFPB’s website (https://www.consumerfinance.gov) to get all the nitty gritty details related to these updates!

Authored by: Marianne Giles, Compliance Analyst