Federal Regulators raised the thresholds for certain lending rules for consumer credit, small-dollar loans and certain mortgages by more than 4.5% Monday.
The Consumer Financial Protection Bureau and Federal Reserve announced the new cutoff amounts that determine eligibility for oversight under the
The threshold for the TILA and CLA, which will go into effect next year, were both increased from $66,400 to $69,500 — an uptick of 4.6% — meaning most transactions below that figure are subject to enhanced disclosure requirements and consumer rescission rights.
The CFPB, Fed and Office of the Comptroller of Currency also adjusted the threshold for so-called higher-priced mortgage loans, which require special appraisals, raising it from $31,000 to $32,400, a jump of a little more than 4.5%.
Last year, the CFPB increased the thresholds on Regulations Z and M from $61,000 to $66,400, an 8.8% hike, while the regulators raised the bar for higher-priced loans from $28,500 to $31,000, an increase of 8.9%. The smaller increases for the 2024 thresholds come from the more modest rate of inflation seen this year.
The CFPB, which was given authority over Regulations Z and M by the Dodd-Frank Act of 2010, adjusts the thresholds of TILA and CLA annually based on the changes to Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers.
Enacted in the late 1960s, TILA was aimed at standardizing the way costs and fees were incorporated into consumer credit products. The CLA originated as a provision of TILA but was later carved out into its own regulation in 1981. The thresholds were implemented as part of Dodd-Frank.
The reform package also called for special appraisals for certain higher-risk mortgages. A joint rulemaking by the Fed, OCC, CFPB, Federal Deposit Insurance Corp. and National Credit Union Administration established an initial threshold of $25,000 for applicability of this standard. The Fed, OCC and CFPB were tasked with adjusting the price annually.
Along with protections against inaccurate and unfair credit issuance and billing practices and the safeguarding of rescission rights, the laws also put limitations on certain dwelling-secured loans, home equity lines of credit and certain closed-end mortgages. TILA also includes minimum standards for loans secured by someone's home and establishes standards for determining if mortgage lending practices are unfair or deceptive.
The heightened standards of TILA and CLA are meant to apply only to consumer loans, meaning loans to businesses, governments and other institutions are generally exempt even if they are below the threshold.
Meanwhile, certain consumer-facing products, such as private education loans and loans secured by real property — including mortgages — are subject to the standards regardless of their size.
