The Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) announced that the 2023 threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans will increase from $28,500 to $31,000. The new threshold amount will be effective Jan.1, 2023, according to a release from the CFPB.
The amount 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, 2022.
The Dodd–Frank Wall Street Reform and Consumer Protection 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 OCC, the board, and the bureau are finalizing amendments to the official interpretations for their regulations that implement Section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for ‘higher-risk mortgages,’ termed ‘higher-priced mortgage loans’ or ‘HPMLs’ in the agencies' regulations,” the release said. “The OCC, the board, the bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Housing Finance Agency issued joint final rules implementing these requirements, effective Jan. 18, 2014.”
The rules exempt, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the CPI-W. If there is no annual percentage increase in the CPI-W, the OCC, the board and the bureau will not adjust this exemption threshold from the prior year.
Additionally, according to the CFPB, 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.