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Agencies Propose Method for Adjusting Small-Loan-Exemption Threshold under HPML Appraisal Rules
On July 22, the CFPB, the Federal Reserve, and the OCC issued a joint proposal “detailing the method that will be used to make annual inflation adjustments to the threshold for exempting small loans from higher-priced mortgage loan appraisal requirements.” The Dodd-Frank Act amended TILA to establish special appraisal requirements for higher-priced mortgage loans (HPMLs). To implement these requirements, the OCC, NCUA, CFPB, Federal Reserve, FDIC, and FHFA issued final rules that became effective on January 18, 2014. The rules exempt transactions of $25,000 or less and require that the $25,000 threshold be adjusted annually to reflect any percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The recently-issued joint proposal would memorialize the calculation method for determining such adjustments and further clarify that, if there is no annual percentage increase in the CPI-W, the exemption threshold from the prior year will not be adjusted. Comments on the proposal are due within 30 days of publication in the Federal Register.