The Consumer Finance Protection Bureau has issued a final rule increasing the asset exemption threshold for the Truth in Lending Act requirement to maintain an escrow account for a higher-priced mortgage loan (HPML).
The CFPB said that Regulation Z generally requires creditors to maintain an escrow account for the payment of taxes and insurance on a first lien HPML.
The agency said that there are two creditor-based exemptions to the escrow account requirement.
The original exemption is for creditors with assets below a certain threshold that also meet additional criteria, including extending a first lien loan subject to the Regulation Z ability to repay rule in a rural or underserved area and having a covered loan volume, with affiliates, at or below a certain level. CFPB said the asset threshold is subject to annual adjustment based on inflation.
It said that for purposes of the asset threshold, a creditor’s assets include the assets of any affiliate that regularly extends covered loans. The asset threshold for 2025 was $2.717 billion, CFPB said.
Some Creditors Are Exempt
“For certain first-lien higher-priced mortgage loans, the exemption threshold is adjusted to increase to $2.785 billion from $2.717 billion,” CFPB said in a release.
It said creditors with assets of less than $2.785 billion (including assets of certain affiliates) as of Dec. 31, 2025, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2026.
CFPB said that this asset limit also will apply during a grace period, in certain circumstances, in regard to transactions with applications received before April 1, 2027.
The threshold for purposes of the original exemption from the HPML escrow account requirement also is one of the criteria that determines whether a creditor will qualify under the ability to repay rule to make loans based on the small creditor portfolio, and small creditor balloon payment, qualified mortgage loan provisions.
For 2026 the $2.785 billion threshold will be used to determine if a creditor is a small creditor under such provisions.
Asset Threshold Increased
CFPB said that the Economic Growth, Regulatory Relief, and Consumer Protection Act, adopted in 2018, required it to add an additional exemption from the HPML escrow account requirements for insured depository institutions, and insured credit unions.
The asset threshold for 2025 was $12.179 billion. The final rule increases the asset threshold for 2026 to $12.485 billion.
As a result, if an insured depository institution’s, or insured credit union’s, assets were $12.485 billion or less on Dec. 31, 2025, the entity will be exempt from the escrow account requirement for HPMLs in 2026.
