CFPB Not Persuaded to Change HOEPA Interest Rate and Points and Fees Limits

At the MHI annual meeting in California last week we learned the industry’s efforts to convince the CFPB to modify through administrative rules the APR rate and points and fees caps currently established in the High-Cost Mortgage provisions have not been successful.  The Bureau has requested additional information and data.  They plan to continue to examine the issue, but appear unwilling to modify the current caps prior to the January 2014 effective date.

The industry continues to exhaust all available resources and calls for increased political pressure with more co-sponsors needed in HR 1779 on this issue. 
Absent some regulatory reversal or a legislative change between now and January, the caps will impact a significant number of consumers and the retailers and lenders who serve them.

The current rates are set at 6.5 percent above the average prime offer rate for homes over $50,000 and 8.5 percent for personal property homes under $50,000.  As an example if the rules were in effect today, the October 10th average prime offer rate for a 15-year fixed-rate loan was 3.31 percent.  This would mean any loan with an APR above 9.81 percent (or 11.81 percent if personal property under $50,000) would be a “predatory loan.”

As discussed in countless member emails, events and in articles in our quarterly magazine, our industry should not expect any lenders to operate in the high-cost “predatory” loan space.