Federal Reserve Board, along with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency, announced new thresholds for exempting loans from special appraisal requirements for higher-priced mortgage loans.
The thresholds for 2022 will increase from $27,200 to $28,500, effective Jan. 1, 2022. The change 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 CPI-W is a subset of the CPI-U index and represents approximately 29 percent of the U.S. population. The CPI-W reported on May 12, 2021, reflects a 4.7 percent increase in the CPI-W from April 2020 to April 2021. Accordingly, the 4.7 percent increase in the CPI-W from April 2020 to April 2021 results in an exemption threshold amount of $28,500 after rounding.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add special appraisal requirements for “higher-risk mortgages. The provision mandated 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, adjusted annually to reflect CPI-W increases.