Exemption Level for Appraisals Will Remain at 2016 Level

While it will remain unchanged in 2017, the Consumer Financial Protection Bureau (CFPB), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC) have issued a final rule regarding future adjustments to the threshold for appraisal exceptions for higher-priced mortgage loans.  

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended the Truth in Lending Act, adding a requirement that lenders get a written appraisal based on an interior inspection of a home's interior.  Loans for $25,000 or less were exempted from this requirement with a provision that the exemption level be revisited annually and revised to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). 

The calculation method adopted in the final rule will allow the thresholds to keep pace with the CPI-W.  Among other clarifications, the final rule details that if there is no annual percentage increase in the CPI-W, the agencies will not adjust the exemption threshold from the prior year.

The calculation method adopted in the final rule will allow the thresholds to keep pace with the CPI-W.  Among other clarifications, the final rule details that if there is no annual percentage increase in the CPI-W, the agencies will not adjust the exemption threshold from the prior year.  Under this rule, the 2017 threshold will remain at the 2016 level of $25,500, based on the CPI-W in effect on June 1, 2016.