On October 4, 2024, the Consumer Financial Protection Bureau, along with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, published the annual adjustment to appraisal requirements for higher-priced mortgage loans (“HPMLs”). The new threshold will apply to loans in an amount not exceeding $33,500.
HPMLs are subject to additional appraisal requirements under Section 35 of Regulation Z, including the requirement to obtain two independent appraisals in some circumstances. 12 C.F.R. 1026.35(c). However, these rules do not apply to loans in the amount of $25,000 or less, with the $25,000 amount to be adjusted annually for inflation based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) as of June 1, each year. Increases in the threshold amount are rounded to the nearest $100 increment.
In years when there is no increase in the CPI-W, the exemption threshold amount from the prior year is not adjusted. When an increase occurs following a year without an adjustment, the threshold is calculated based on the dollar amount that would have resulted, after rounding, if decreases and subsequent increases in the CPI-W had been taken into account. The threshold adjustments for prior years can be viewed here.
The Bureau of Labor Statistics reported the CPI-W on May 15, 2024 (based on data from April 2023 to April 2024). The CPI-W reflects a 3.4 percent increase over the 2024 threshold amount of $32,400, resulting in a new threshold of $33,500, after rounding. The new threshold amount is effective January 1, 2025.
