New exemption thresholds for consumer credit transactions, leases and appraisals

Compliance Flow Chart Concept

New rules that increase exemption thresholds for appraisals of higher-priced mortgage loans, as well as consumer credit transactions and consumer leases are now in effect. The new rules, which took effect Jan. 1, 2020, were jointly issued by the CFPB and the Federal Reserve Board.

In addition to impacting higher-priced mortgage loans, the new thresholds will also affect consumer credit transactions and consumer leases.

Specifically, the rules increase to $27,200 the Regulation Z threshold for exempting higher-priced mortgage loans from the special appraisal requirements. Additionally, the Regulation Z and Regulation M thresholds have increased to $58,300 for exempting consumer credit transactions from the Truth in Lending Act and consumer leases from the Consumer Leasing Act.

Thresholds are adjusted annually based on inflation. The threshold amount is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1 of the previous year, according to the CFPB. If there is no annual percentage increase in the CPI-W, the exemption threshold from the prior year will not be adjusted.

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