Executive Letter: 2023 Brings Adjusted Regulatory Thresholds

By Rose Oswald Poels

Happy New Year! As we step into 2023, there are several thresholds which have been adjusted by both state and federal regulators which go into effect now that the new year has arrived. Below is a collection of thresholds effective January 1, 2023, including a link to pull each publication for reference.

• Based upon the annual percentage increase in the CPI-W as of 06/01/2022, the exemption threshold for Regulation Z (Truth in Lending Act) will increase to $66,400, up from $61,000.
• Based upon the annual percentage increase in the CPI-W as of 01/01/2022, the exemption threshold for Regulation M (Consumer Leasing Act) will increase to $66,400, up from $61,000.
• Based on the CPI-W in effect as of 06/01/2022, the exemption threshold under Regulation Z for HPML appraisals will increase to $31,000, up from $28,500.
• Based on the 8.6 percent increase in the average of the CPI-W for the 12-month period ending in November 2022, the asset-size threshold to be exempt from collecting HMDA data in 2023 is adjusted to $54 million, up from $50 million.
• The dollar amount of the maximum allowable charge for disclosures by a consumer reporting agency (CRA) to a consumer pursuant to FCRA section 609 for the 2023 calendar year is $14.50.
• The asset-size threshold which exempts creditors from the requirement to establish an escrow account for HPMLs will be:
  • For creditors and their affiliates that regularly extended covered transactions secured by first liens, the asset-size threshold is adjusted to $2.537 billion, up from $2.336 billion; and
  • The exemption threshold for certain insured depository institutions with assets of $10 billion or less is adjusted to $11.374 billion, up from $10.473 billion.
• Based on the CPI-W in effect as of 06/01/2022, the dollar amount thresholds for HOEPA and QM-related loans have been adjusted as follows:
  • For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages will be $24,866.
  • The adjusted points-and-fees dollar trigger for high-cost mortgages will be $1,243.
  • For 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) will be:
    • 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331;
    • 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331;
    • 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599;
    • 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331;
    • 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or
    • 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.
  • For all categories of QMs, the thresholds for total points and fees will be:
    • 3 percent of the total loan amount for a loan greater than or equal to $124,331;
    • $3,730 for a loan amount greater than or equal to $74,599 but less than $124,331;
    • 5 percent of the total loan amount for a loan greater than or equal to $24,866 but less than $74,599;
    • $1,243 for a loan amount greater than or equal to $15,541 but less than $24,866; and
    • 8 percent of the total loan amount for a loan amount less than $15,541.
• For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00.
• Based upon the CPI-W, the CRA regulation has adjusted the asset-size thresholds used to define “small bank” and “intermediate small bank” to be:
  • Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion.
  • 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
• The DFI has established the interest rate that must be paid on required escrow accounts under section 138.052(5) of the Wisconsin Statutes. The new rate is 0.11%.
• The FDIC Designated Reserve Ratio remains 2 percent for 2023.
• The OCC assessment rates are reduced for the general assessment fee schedule. OCC has maintained assessment rates from 2022 for the independent trust and independent credit card fee schedules. Also, there is no inflation adjustment to assessment rates.
• Contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500, up from $20,500. The limit on annual contributions to an IRA increased to $6,500, up from $6,000.
• Multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion for each enterprise, for a combined total of $150 billion. The caps reflect an anticipated contraction of the multifamily originations market this year. FHFA will require that at least 50 percent of Fannie’s and Freddie’s multifamily business be mission-driven affordable housing.
• The conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023 for one-unit properties will be $726,200, an increase from $647,200.
• New loan limits for FHA’s Single Family Title II Forward and Home Equity Conversion Mortgage (HECM) insurance programs, based upon property size and location, range from $472,030 to $3,142,800.

I am looking forward to this new year and excited about what 2023 may bring. Be sure to stay connected with WBA through our various releases and publications, and through our social media channels.