CFPB, Fed And OCC Mull Small Loan Appraisals

A consortium of regulatory agencies has issued a proposal that would help make annual adjustments to inflation that would be used to scrutinize small loans from mortgage loan appraisal requirements that carry hefty price tags.

In a statement released jointly by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Federal Reserve Board, the agencies noted that the Dodd-Frank Act stipulates that there now must be appraisal requirements that can be used for higher-priced mortgage loans, and those mandates entail a physical visit to a home for inspection and insight as a prelude to making those loans.

The exemptions extend to loans that are below a $25,000 threshold. That threshold is to be adjusted annually to tie in with the Consumer Price Index for Urban Wage Earners and Clerical Workers. As noted by the release, the threshold will adjust each year if there is, in fact, an increase, but if there is no increase, then there will not be an adjustment from the previous year’s levels.

The appraisal limits are subject to a commentary period, which will commence upon rules slated to be published in the Federal Register, which the agencies said is an event that is “expected shortly.”