Appraisals for Higher-Priced Mortgage Loans Exemption Threshold

<RULE> DEPARTMENT OF THE TREASURY <SUBAGY>Office of the Comptroller of the Currency</SUBAGY> <CFR>12 CFR Part 34</CFR> <DEPDOC>[Docket No. OCC-2025-0306]</DEPDOC> <RIN>RIN 1557-AF39</RIN> FEDERAL RESERVE SYSTEM <CFR>12 CFR Part 226</CFR> <DEPDOC>[Docket No. R-1878]</DEPDOC> <RIN>RIN 7100-AH12</RIN> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1026</CFR> <SUBJECT>Appraisals for Higher-Priced Mortgage Loans Exemption Threshold</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); and Consumer Financial Protection Bureau (Bureau). <HD SOURCE="HED">ACTION:</HD> Final rules and official interpretations. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The OCC, the Board, and the Bureau are finalizing amendments to the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies' regulations. A December 2013 rulemaking exempted transactions of $25,000 or less and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the CPI-W in effect as of June 1, 2025, the exemption threshold will increase from $33,500 to $34,200, effective January 1, 2026. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective January 1, 2026. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> <E T="03">OCC:</E> Maria Riegger, Counsel, Chief Counsel's Office, at (202) 649-5490. If you are deaf, hard of hearing, or have a speech disability, please dial 711 to access telecommunications relay services. <E T="03">Board:</E> Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667. For users of text telephone systems (TTY) or any TTY-based Telecommunications Relay Services, please call 711 from any telephone, anywhere in the United States. <E T="03">Bureau:</E> Dave Gettler, Paralegal Specialist, Office of Regulations, at 202-435-7700 or at: <E T="03">https://reginquiries.consumerfinance.gov/.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended TILA to add special appraisal requirements for “higher-risk mortgages.”  <SU>1</SU> <FTREF/> In January 2013, the OCC, the Board, the Bureau, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) jointly issued a final rule implementing these requirements and adopted the term “higher-priced mortgage loan” (HPML) instead of “higher-risk mortgage” (January 2013 Final Rule). <SU>2</SU> <FTREF/> In July 2013, the Agencies proposed additional exemptions from the January 2013 Final Rule. <SU>3</SU> <FTREF/> In December 2013, the Agencies issued a supplemental final rule with additional exemptions from the January 2013 Final Rule (December 2013 Supplemental Final Rule). <SU>4</SU> <FTREF/> Among other exemptions, the Agencies adopted an exemption from the new HPML appraisal rules for transactions of $25,000 or less, to be adjusted annually for inflation. <FTNT> <SU>1</SU>  Public Law 111-203, sec. 1471, 124 Stat. 1376, 2185-87 (2010), codified at TILA sec. 129H, 15 U.S.C. 1639h. </FTNT> <FTNT> <SU>2</SU>  78 FR 10368 (Feb. 13, 2013). </FTNT> <FTNT> <SU>3</SU>  78 FR 48548 (Aug. 8, 2013). </FTNT> <FTNT> <SU>4</SU>  78 FR 78520 (Dec. 26, 2013). </FTNT> The OCC's, Board's, and Bureau's versions of the January 2013 Final Rule and December 2013 Supplemental Final Rule and corresponding official interpretations are substantively identical. The FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations under the January 2013 Final Rule and December 2013 Supplemental Final Rule. <SU>5</SU> <FTREF/> <FTNT> <SU>5</SU>   <E T="03">See</E> NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the FDIC adopted the Bureau's version of the regulation, the FDIC did not issue its own regulation containing a cross-reference to the Bureau's version. <E T="03">See</E> 78 FR 10368 at 10370. </FTNT> The OCC's, Board's, and Bureau's regulations, <SU>6</SU> <FTREF/> and their accompanying official interpretations, <SU>7</SU> <FTREF/> provide that the exemption threshold for smaller loans will be adjusted effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold amounts from the prior year. <SU>8</SU> <FTREF/> <FTNT> <SU>6</SU>  12 CFR 34.203(b)(2) (OCC); 12 CFR 226.43(b)(2) (Board); and 12 CFR 1026.35(c)(2)(ii) (Bureau). </FTNT> <FTNT> <SU>7</SU>  12 CFR part 34, appendix C to subpart G, comment 203(b)(2)-1 (OCC); 12 CFR part 226, supplement I, comment 43(b)(2)-1 (Board); and 12 CFR part 1026, supplement I, comment 35(c)(2)(ii)-1 (Bureau). </FTNT> <FTNT> <SU>8</SU>   <E T="03">See</E> 12 CFR part 34, appendix C to subpart G, comment 203(b)(2)-1 and -2 (OCC); 12 CFR part 226, supplement I, comment 43(b)(2)-1 and -2 (Board); and 12 CFR part 1026, supplement I, comment 35(c)(2)(ii)-1 and -2 (Bureau). </FTNT> On November 30, 2016, the OCC, the Board, and the Bureau published a final rule in the <E T="04">Federal Register</E> to memorialize the calculation method used by the OCC, the Board, and the Bureau each year to adjust the exemption threshold to ensure that the values for the exemption threshold keep pace with the CPI-W (HPML Small Dollar Adjustment Calculation Rule). <SU>9</SU> <FTREF/> The HPML Small Dollar Adjustment Calculation Rule memorialized the policy that, if there is no annual percentage increase in the CPI-W, the OCC, Board, and Bureau will not adjust the exemption threshold from the prior year. The HPML Small Dollar Adjustment Calculation Rule also provided that, in years following a year in which the exemption threshold was not adjusted because there was a decrease in the CPI-W from the previous year, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. If the resulting amount calculated, after rounding, is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly; if the resulting amount calculated, after rounding, is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted, after rounding. <FTNT> <SU>9</SU>   <E T="03">See</E> 81 FR 86250 (Nov. 30, 2016). </FTNT> <HD SOURCE="HD1">II. 2026 Adjustment and Official Interpretations Revision</HD> Effective January 1, 2026, the exemption threshold amount is increased from $33,500 to $34,200. This amount is based on the CPI-W in effect on June 1, 2025, which was reported on May 13, 2025 (based on April 2025 data). <SU>10</SU> <FTREF/> The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 30 percent of the U.S. population. The CPI-W reported on May 13, 2025, reflects a 2.1 percent increase in the CPI-W from April 2024 to April 2025. Accordingly, the 2.1 percent increase in the CPI-W from April 2024 to April 2025 results in an exemption threshold amount of $34,200, after rounding. The OCC, the Board, and the Bureau are revising the official interpretations to their respective regulations to add new comments as follows: <FTNT> <SU>10</SU>  The Bureau of Labor Statistics calculates consumer-based indices for each month but does not report those indices until the middle of the following month. As such, the most recently reported indices as of June 1, 2025, were reported on May 13, 2025, and reflect economic conditions in April 2025. </FTNT> • Comment 203(b)(2)-3.xiii to 12 CFR part 34, appendix C to subpart G (OCC); • Comment 43(b)(2)-3.xiii to supplement I of 12 CFR part 226 (Board); and • Comment 35(c)(2)(ii)-3.xiii to supplement I of 12 CFR part 1026 (Bureau). These new comments state that, from January 1, 2026, through December 31, 2026, the threshold amount is $34,200. These revisions are effective January 1, 2026. <HD SOURCE="HD1">III. Regulatory Analysis</HD> <HD SOURCE="HD2">Administrative Procedure Act</HD> Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the agency finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. <SU>11</SU> <FTREF/> The amendments in this rule are technical and apply the method previously memorialized in the December 2013 Supplement ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 32k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━