On November 13, 2023, the CFPB published three threshold changes in the Federal Register. Two of the threshold changes relate to Regulation Z while one change relates to consumer leasing under Regulation M. The changes were based on the 4.6 percent increase in CPI-W as of May 10, 2023.
HPML Appraisal Exemption
The first change relates to the threshold exemption for smaller loans from the appraisal requirements for higher-priced-mortgage loans (HPMLs). The Dodd-Frank Act 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 inflation increases.
If there is no inflation increase during a year, the agencies will not adjust this exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in a common index to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the index had been taken into account.
The threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2024 has been increased from $31,000 to $32,400.
Consumer Credit Transaction Threshold
Each year, the CFPB sets a threshold for which Regulation Z applies to consumer credit transactions not secured by real estate. This exemption, found in 1026.3(b) exempts credit that is (A) secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer; or (B) a private education loan. The adjusted threshold for 2024 is increasing to $69,500, up from $66,400 in 2022.
Consumer Leasing
The consumer leasing threshold, found in Regulation M (1013.2) is also being increased to $69, 500.
The appraisal threshold increase can be found here.
The threshold for exempt consumer credit transactions can be found here.
The consumer leasing (Reg M) threshold can be found here.