On October 31, 2019, the CFPB, together with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, posted a notice to the Federal Register and its website regarding the annual adjustment to appraisal requirements for higher-priced mortgage loans (“HPMLs”). The new threshold will apply for loans in an amount not exceeding $27,200.
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 based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) as of June 1, each year.
The Bureau of Labor Statistics reported the CPI-W on May 10, 2019, which reflects a 1.9 percent increase over the CPI-W for the prior year. The May 10 index is the most recent index as of June 1. A 1.9 percent increase over the 2019 threshold of $26,700, results in a new threshold of $27,200 that will be in effect as of January 1, 2020.
