TILA Appraisal Exemption Threshold Moves Higher

Austin TX Mortgage Brokers - Cloud Financial Group, LLC

By Jan Swanson

Like a rising tide, rising prices are pushing a lot of other financial elements higher. Earlier this week surging home prices drove a near $100K increase in conforming loan limits, now regulators have raised the dollar threshold for an exemption to the Truth in Lending Act (TILA) based on rising wages.

Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies’ regulations. The Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) jointly issued final rules implementing these requirements, effective January 18, 2014. The rules, however, exempted several loan types from the appraisal requirements, among them transactions of $25,000 or less. The rule allowed for annual adjustments of that amount and this year the threshold was $27,200.

On Wednesday, three of the regulatory agencies (CFPB, the Fed, and OCC) announced that the increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) had necessitated an adjustment in that exemption threshold. Effective January 1, 2022 it will increase to $28,500.

We don’t understand the logic behind basing a change in the exempt amount of property loan on an inflation index, but it is instructive that loan limits, based on home price gains, have moved from $417,000 in 2014 to $647,000 in 2022, an increase of 55.2 percent, while the appraisal exemption has grown by only $3,500 or 14 percent over the same period.

Original Post: http://www.mortgagenewsdaily.com/12022021_appraisal_standards.asp

Residential Construction No Longer Dominating Spending

By: Mathew Graham

National spending on construction spending rose slightly in October, but for the second month in a row, the increase wasn’t driven by the residential sector. The U.S. Census Bureau reported that construction put in place during the month was at a seasonally adjusted annual rate of $1.598 trillion, an 0.2 percent increase from September and up 8.6 percent compared to October 2020.

On a non-adjusted basis, spending totaled $141.911 billion, down from $145.746 billion in September. For the year-to-date (YTD) spending totals $1.373 trillion, 7.5 percent more than the $1.231 spent to the same point in 2020.

Privately funded construction fell by 0.2 percent from the previous month to a seasonally adjusted rate of $1.245 trillion. This represents an 11.1 percent increase from the prior October.

Residential spending was down 0.5 percent from September while remaining 16.7 percent higher year-over-year. The seasonally adjusted annual rate for all residential building was $774.688 billion. Single-family spending was down 0.8 percent and multifamily down 0.1 percent to annual rates of $412.084 billion and $100.115 billion, respectively. Compared to their October 2021 levels, single-family is up 23.1 percent and multifamily spending increased 9.9 percent.

A total of $109.924 billion in private dollars was expended in October and spending YTD has reached $1.031 billion. This is less that the $111.836 billion spent in September but 11.6 percent higher than the $923.489 billion spent during the first 10 months of 2020. On an unadjusted basis, residential spending was $68.884 billion, $37.480 billion on new single-family and $8.569 billion on new multifamily units. All three numbers were down slightly from their September counterparts.

YTD privately funded residential spending increased 24.2 percent to $644.794 billion. Single-family spending rose 35.6 percent to $340.294 billion and multifamily spending YTD is 16.6 percent higher than last year at $82.776 billion.

Publicly funded expenses were at a seasonally adjusted annual rate of $353.049 billion in October, up 1.8 percent and 0.4 percent for the month and on an annual basis. Residential spending rose 2.9 percent to $9.163 billion. Public spending is up 4.8 percent overall YTD, but residential spending has declined 1.5 percent.