The Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) announced the 2022 threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans will increase from $27,200 to $28,500, according to a release from the CFPB.
The threshold amount will be effective Jan. 1, 2022 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, 2021.
“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 release stated. “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 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 OCC, the board, the bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Housing Finance Agency (the Agencies) jointly issued final rules implementing these requirements, effective Jan. 18, 2014,” the Agencies said. “The Agencies’ rules exempted, 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 Consumer Price Index for Urban Wage Earners and Clerical Workers (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.
“However, in years following a year in which the exemption threshold was not adjusted, 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,” the Agencies added.