The Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) have announced that the 2024 threshold for whether higher-priced mortgage loans [1] are subject to special appraisal requirements will increase from $31,000 to $32,400.
The threshold amount will become effective January 1, 2024, and is based on the annual percentage increase in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers [2], known as CPI-W, as of June 1, 2023.
The Dodd-Frank Act [3] added special appraisal requirements for higher-priced mortgage loans, including that creditors 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.
The CPI-W is a monthly measure [2] of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services. The CPI-W is based on the spending patterns of urban wage earners and clerical workers. Index data are available for the U.S. City Average (or national average), for various geographic areas (regions and metropolitan areas), for national population size classes of urban areas, and for cross-classifications of regions and size classes. Individual indexes are available for more than 200 items (e.g., apples, men's shirts, airline fares), and over 120 different combinations of items (e.g., fruits and vegetables, food at home, food and beverages, and all items).
The OCC, Federal Reserve, and CFPB are finalizing amendments to the official interpretations for their regulations that implement Section 129H of the Truth in Lending Act (TILA) [4]. Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies' regulations.