The exemption from the special appraisal requirements for higher-priced mortgages with balances at or under $27,200 will remain unchanged in 2021, federal regulators announced.
A higher-priced mortgage loan, sometimes also known as a high-cost mortgage, has an annual percentage rate that exceeds the annual prime offer rate by 1.5 percentage points for a first lien loan and 3.5 percentage points for a junior lien.
Under this exception, created in the 2013 rulemaking for the Dodd-Frank Act, loans under the threshold do not have to comply with appraisal rules that are specific to these loans. The current methodology for calculating the threshold was adopted in 2016.
The Consumer Financial Protection Bureau, the Federal Reserve Board and the Office of the Comptroller of the Currency jointly administer the rule and calculate the threshold annually. It is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1.
The last CPI-W before that date was published on May 12, showing a 0.1% increase in the index in April over the same month one year prior, the joint notice said. After rounding, the calculation left the amount of the exemption unchanged for 2021.
Under the higher-priced mortgage loan rule, there must be a written report from an appraiser who performs a physical interior visit to the property.
Among loan types that are exempt from the higher-priced rule are mortgages secured by a new manufactured home, mobile homes, boats and trailers; transactions to finance the initial construction of a dwelling; bridge loans with maturities of 12 months or less on a primary residence; and reverse mortgages.
