Annual Threshold Adjustments for Reg M and TILA High Priced Appraisals

The CFPB announced several annual threshold adjustments in the form of new final rules.

In a joint rulemaking between the CFPB, the Federal Reserve Board, and the Office of the Comptroller of the Currency the agencies make their annual adjustment to various thresholds based on CPI increases.  For the special appraisal requirements under the TILA for Higher Priced Mortgage Loans, recall that at its inception the threshold for exemption under the appraisal requirement was a transaction of $25,000 or less.  With this year’s adjustment, which is effective on January 1, 2024, the threshold is increased to $32,400.

For more THMA and other resources on the HPML Appraisal Rule, we recommend our Owner Finance Resources and the Small Entity Guidance on the HPML Rule.

Similarly in another joint rulemaking between the CFPB and the Federal Reserve Board the threshold is increased for Regulation M for determining the exempt consumer lease transactions under the Consumer Leasing Act.  Reg M comes into play in the manufactured housing space when the home is offered as a lease with an option to purchase. 

A consumer lease is exempt from the requirements of Reg M if the total contractual obligation exceeds the threshold amount in effect at the time of consummation. The total contractual obligation includes nonrefundable amounts a lessee is contractually obligated to pay to the lessor but excludes items such as the residual value amounts or purchase-option prices, and amounts collected by the lessor but paid to a third party, such as taxes, licenses, and registration fee.  Based on the annual percentage increase in the CPI, the exemption threshold under Reg M will increase from $66,400 to $69,500, effective January 1, 2024.

For more TMHA resources on Reg M, we recommend our Knowledge Based Article on FEDERAL CONSUMER LEASING ACT DISCLOSURE (REG M) & OPTION TO PURCHASE ADDENDUM EXPLAINER.