The Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board (the Board), and the Office of the Comptroller of the Currency (OCC) recently announced the 2024 threshold for whether higher-priced mortgage loans are subject to special appraisal requirements will increase from $31,000 to $32,400. The threshold amount will be effective Jan. 1, 2024 and is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, as of June 1, according to a release from the CFPB.
The Dodd-Frank Act added special appraisal requirements for higher-priced mortgage loans, including that creditors obtain a written appraisal based on a physical visit to the interior of the home before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases.
The OCC, the Board, and the CFPB are finalizing amendments to the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA) which establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies’ regulations.
The OCC, the Board, the CFPB, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) issued joint final rules implementing these requirements, effective Jan. 18, 2014.
If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the CFPB will not adjust this exemption threshold from the prior year.
Additionally, in years following a year in which the exemption threshold was not adjusted because CPI-W decreased, the threshold is calculated by applying the annual percentage increase in the 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.