The exception to the special valuation requirements for higher-priced mortgages with a balance of $ 27,200 or less will remain unchanged in 2021, federal regulators said.
A higher priced mortgage loan, sometimes referred to as a high cost mortgage, has an annual percentage that exceeds the annual peak supply rate by 1.5 percentage points for a primary lien and 3.5 percentage points for a subordinate lien.
According to this exception, created under the Dodd-Frank Act of 2013, loans below the threshold are not required to meet the valuation rules specific to those 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 office workers as of June 1st.
The last CPI-W prior to that date was released on May 12 and showed the index rose 0.1% in April over the same month last year, the joint statement said. After rounding, the calculation left the tax exemption unchanged for 2021.
The higher-priced mortgage loan rule requires a written report from an appraiser who will conduct a physical interior inspection of the property.
The types of loans that are exempt from the high rate rule include mortgages secured by a new prefabricated house, mobile homes, boats and trailers; Transactions to finance the first construction of an apartment; Bridging loans with terms of 12 months or less on a primary residence; and reverse mortgages.