Federal financial regulators set the 2025 threshold for higher-priced mortgage loans that are subject to special appraisal requirements last week.
The new threshold will increase from $32,400 to $33,500, according to regulators, including the Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board (Fed), and the Office of the Comptroller of the Currency (OCC).
The new threshold amount will be effective starting Jan. 1, 2025. It is based on the 3.4 percent annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, as of June 1, 2024.
The Dodd-Frank Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 added special appraisal requirements for higher-priced mortgage loans to the Truth in Lending Act. More specifically, it laid out that creditors must 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.
If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount, effective the following Jan. 1 through Dec. 31 will not change from the previous year.