FRB Raises High Cost Loan Cut-Off

Effective January 1, 2000, the definition of a high cost loan will involve a little more money. The FRB has published the new amount to be $451.00. The amount originates in the Home Ownership and Equity Protection Act of 1994. When enacted, the trigger amount was $400. The new level of $451 is set based on the FRB's analysis of the Consumer Price Index as measured the previous June 1.

If the points and fees for a loan exceed $451 or 8% of the loan amount, whichever is greater, the loan is a high cost loan and extra disclosures are triggered under Section 226.32.

Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 13 & 14, 11/99