As the cost of seemingly everything rises and rises, the Consumer Financial Protection Bureau [1] (CFPB), The Federal Reserve Board of Governors [2], and the Office of the Comptroller of the Currency [3] have announced for the 2023 calendar year that the new thresholds for exempting loans from special appraisal requirements for higher-priced mortgage loans will increase from $28,500 to $31,000.
The new thresholds start January 1 and are based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers [4], known as CPI-W, as of June 1, 2022.
The 2009 Dodd-Frank Wall Street Reform and Consumer Protection Act [5] added provisions for these special appraisal requirements for higher-than-average mortgages, including a requirement that creditors obtain a written appraisal based on a physical visit to the home before extending an offer for the property.
The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases.
Also, in a separate announcement, the CFPB and the Federal Reserve’s Board of Governors, announced new thresholds for certain credit and lease transactions in 2023 are exempt from Regulation Z and Regulation M, which are more commonly known as “Truth in Lending” and “Consumer Leasing.”
As ordered by law, these agencies are required to adjust the price thresholds based on the annual increase of the CPI-W. Regulation Z and Regulation M will apply to consumer credit transactions and consumer leases in 2023 of $66,400 (or less).
However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the amount of the loan.