Introduction
Happy Holidays!!! Can’t believe we are almost done with 2018!
At the end of every year, we have the dollar amount changes for several thresholds in the BCFP rules, the Federal Reserve Board rules and even IRS rules. As a reminder, those thresholds (that we know of now) are listed below. However, in order to keep ComplySight accurate, they will not be updated until a few days prior to their actual effective date. So, there will be no vacations for us the last week of the year!
Regulation Z – Ability-to-Repay
As noted above, each year the BCFP is required to calculate the dollar amounts for several provisions within Regulation Z. The changes made to the points and fees thresholds within the Ability-to-Repay requirements are recalculated for inflation, using the Consumer Price Index for All Urban Consumers Index (CPI-U). In order to comply with these changes effective on January 1, 2019, the credit union must have points and fees below these new thresholds in order for the mortgage to be a “qualified mortgage” with the safe harbor protections.
- 3 percent of the total loan amount for a loan greater than or equal to $107,747;
- $3,232 for a loan greater than or equal to $64,648 but less than $107,747;
- 5 percent of the total loan amount for a loan greater than or equal to $21,549 but less than $64,648;
- $1,077 for a loan greater than or equal to $13,468 but less than $21,549; or
- 8 percent of the total loan amount for a loan less than $13,468.
Regulation Z – High Cost Mortgage
Similar to the changes made above under the Ability-to-Repay rules, the BCFP also amended the points and fees thresholds for determining whether a loan is considered a “high cost mortgage” and therefore subject to the relevant protections under the applicable rules. These changes also become effective on January 1, 2019.
A covered loan will be considered a high-cost mortgage if the points and fees exceed the following thresholds:
- 5 percent of the total loan amount for a loan amount greater than or equal to $21,549;
- 8 percent of the total loan amount or $1,077 (whichever is less) for a loan amount less than $21,549.
Regulation Z – Higher-Priced Mortgage Loan Escrow Exemption and Small Creditor Exemption for Portfolio and Balloon Payment Qualified Mortgages.
The BCFP adjusts their asset-size threshold for credit unions to qualify for an exemption to the escrow account requirements for higher-priced mortgages. The same asset-size threshold will also determine eligibility for small-creditor portfolio and balloon-payment qualified mortgages. Therefore credit unions with assets below a certain amount (among a few other criteria) may be exempt from the HPML escrow requirements and also eligible for small creditor status. This adjustment has not yet been published.
Regulation Z – Higher-Priced Mortgage Loan Appraisal Exemption
The BCFP exempts certain higher-priced mortgage loans (HPMLs) from the appraisal requirements if they are below an amount that is adjusted each year for inflation. Effective January 1, 2019, HPMLs that are less than $26,700 will not be required to have an appraisal under the rules.
Regulation Z – Credit Cards
Credit unions should be aware that the safe harbor penalty fees for credit cards under Regulation Z that have been updated, are effective on January 1, 2019 and are listed below:
- $28 for the first late payment fee; and
- $39 for each subsequent violation within the following six months.
Regulation C - HMDA
Each year the BCFP evaluates the asset-size exemption under HMDA as compared with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). We don’t yet have the asset-size threshold adjustment for 2019.
Regulation D – Reserve Requirements
Each year, the Federal Reserve Board makes adjustments to the reserve thresholds within Regulation D using statutory formulas specified in the Federal Reserve Act. Credit unions must maintain reserves based on the mix of deposits. Below are the thresholds for 2019:
- The first $16.3 million is exempt from the reserve requirement;
- Transaction accounts between $16.3 million and $124.2 million will have a 3 percent reserve requirement; and
- Transaction accounts over $124.2 million will have a 10 percent reserve for amounts over $124.2 million plus $3.237 million.
IRS Rules – Health Savings Accounts
Credit unions should be aware of the change in contribution limits to health savings accounts for both individuals and families effective on January 1, 2019:
Contributions must be no more than $3,500 in 2019 for an individual health plan or $7,000 in 2019 for a family health plan. These figures are adjusted annually, based on cost of living increases. Members over the age of 55 may make an additional “catch-up” contribution of $1,000.
Regulation M – Consumer Leasing
Certain requirements exist for credit unions offering consumer leases. Under Regulation M, a consumer lease is defined and includes a total contractual obligation that cannot be exceed, which is adjusted annually. Effective January 1, 2019, that lease amount is $57,200.
