Federal regulatory agencies recently announced annual threshold
adjustments for determining appraisal requirements for “higher-priced” mortgage
loans. Such mortgages are deemed to be associated with higher risks than others
by the Truth in Lending Act (TILA) and Regulation Z.
The Consumer Financial Protection Bureau (CFPB), the Federal
Reserve and the Office of the Comptroller of the Currency (OCC) included
details about the adjustments in a joint press release.
Effective Jan. 1, 2024, the appraisal threshold for
higher-priced mortgage loans will increase from $31,000 to $32,400, according
to the release. The decision was based on the Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W) as of June 1.
The changes are required under the Dodd-Frank Act to
stipulate special appraisal prerequisites for higher-priced mortgage loans,
which necessitate a written appraisal based on an interior home visit prior to issuance.
Loans amounting to $25,000 or less are exempt from these requirements.
This announcement signifies a response to ongoing economic
shifts and aims to streamline regulatory thresholds in line with changes caused
by inflation. The adjustment is intended to balance the need for appraisal
requirements against market dynamics while offering exemptions for smaller
loans, fostering accessibility in mortgage lending, according to the release.
Additionally, the changes are aimed at ensuring appropriate
appraisals are conducted for higher-priced mortgage loans while promoting
accessibility for smaller loans.
The agencies noted annual appraisal threshold adjustments are
important for maintaining the integrity of mortgage lending practices and
ensure consumer protection within the housing market.