Insights

For years, the Utah Consumer Credit Code (the "UCCC") applied to non-mortgage consumer credit transactions (loans, credit sales and leases) with an amount financed (as defined in the federal Truth in Lending Act) or credit limit of $25,000 or less. (The UCCC has always applied to all HELOCs and to junior lien mortgage loans of any amount.) In 2014, Utah increased the cap that applies to non-mortgage credit transactions.

Beginning in May of 2014, the UCCC applied to non-mortgage credit transactions with an amount financed of $50,000 or less. The new law required the Department of Financial Institutions ("DFI") to adjust the cap annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.

We recently asked the DFI what the new number was going to be for 2015. In response, the DFI said that it was not going to announce a new cap because, in its view, the UCCC cap must always match the TILA cap. That was a surprise. As you may recall, the TILA cap for non-mortgage transactions was changed from $25,000 to $50,000 in 2011. Since then, the TILA cap increased to $51,800 (2012), $53,000 (2013) and $53,500 (2014). The CFPB has announced that the TILA cap for 2015 will be $54,600.

The UCCC does not allow the DFI to increase the UCCC cap from $50,000 to $54,600 in a single year. That is an increase of 9.2%. The CPI-W increased by 2% from June 2013 to June 2014, according to the CFPB. So, the DFI should announce that the UCCC cap will increase by 2% in 2015, from $50,000 to $51,000. But, the DFI isn't going to do that. The DFI's position is that the intent of the law was to make the UCCC and TILA caps the same. So, to be safe, assume that the UCCC cap and the TILA cap are both at $54,600 in 2015 and will remain in lock step in future years.

Timothy P. Meredith is a partner in the Hanover, MD office of Hudson Cook, LLP. Tim can be reached at 410-865-5404 or by email at tmeredith@hudco.com.