Agencies Issue Final Rule on Method to Adjust the Threshold for Exempting Small Loans from Special Appraisal Requirements and Announce 2017 Threshold

The Consumer Financial Protection Bureau (CFPB), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC) today issued a final rule detailing the method that will be used to make annual inflation adjustments to the threshold for exempting small loans from special appraisal requirements. The final rule also applies the calculation method to the exemption threshold for 2017. The threshold will remain at $25,500, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in effect on June 1, 2016.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended the Truth in Lending Act to add special appraisal requirements for higher-priced mortgage loans, including a requirement that creditors obtain a written appraisal based on a physical visit to the home’s interior before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less and also provide that the exemption threshold will be adjusted annually to reflect increases in the 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 attached notice will be published shortly in the Federal Register.

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Related Link

• Federal Register Notice (PDF)