CFPB, Fed, OCC Increase Thresholds for Small Loan Exemption Appraisal Requirements for Higher-Priced Mortgage Loans
The Consumer Financial Protection Bureau, Federal Reserve Board and Office of the Comptroller of the Currency yesterday announced the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2020 will increase from $26,700 to $27,200.
The threshold amount will be effective January 1 and is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1.
The Dodd-Frank Act amended the Truth in Lending Act to add special appraisal requirements for higher-priced mortgage loans, including a requirement that creditors obtain a written appraisal based on a physical visit to the home’s interior before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less and also provide that the exemption threshold will be adjusted annually to reflect increases in the CPI-W.
“If there is no annual percentage increase in the CPI-W, the agencies will not adjust this exemption threshold from the prior year,” the agencies said. “However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account.”
The Notice can be accessed online at https://www.federalregister.gov/documents/2019/10/30/2019-21559/appraisals-for-higher-priced-mortgage-loans-exemption-threshold.