Agencies Announce Threshold for Smaller Loan Exemption from Appraisal Requirements

On November 18th, 2020, the Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2021 will remain the same as it was in 2020 at $27,200. The new rules will be set in place on January 1, 2021.

The Truth in Lending Act was amended by The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to add special appraisal requirements for higher-priced mortgage loans. The appraisals required creditors to obtain a written appraisal based on a physical visit to the home’s interior before making a higher-priced mortgage loan. 

The Agencies’ rules exempted, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust this exemption threshold from the prior year. Based on the CPI-W in effect as of June 1, 2020, the exemption threshold will remain at $27,200, effective January 1, 2021.