On August 4, 2016, the CFPB published for comment proposed substantive and organizational changes to the Regulation Z Commentary regarding the calculation of the annual exemption threshold amount for the special appraisal requirements for higher-priced mortgage loans under section 129H of the Truth in Lending Act (TILA). Both the Office of Comptroller of Currency and the Federal Reserve Board have proposed corresponding proposed rules. Comments must be received on or before September 6, 2016.
When originally adopted by the CFPB in 2014, the final rule for appraisals in connection with higher-priced mortgage loans exempted, among other loan types, transactions of $25,000 or less. The final rule also required that the $25,000 amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Among other changes, the proposed rule would bifurcate the calculation of the annual exemption threshold amount into actual and baseline threshold amounts. The actual threshold amount would be the exemption amount for the upcoming year and could not be less than the prior year’s actual threshold amount. The baseline threshold amount would be used to calculate the actual threshold amount for a year following a year in which the actual threshold amount was not adjusted because the previous year’s CPI-W would have caused a decrease in the actual threshold amount.