WASHINGTON — Federal regulators on Friday issued proposals outlining methodologies for establishing how thresholds for certain exemptions to Truth in Lending requirements would be set.
The plans, filed jointly by the Consumer Financial Protection Bureau, Federal Reserve and Office of the Comptroller of the Currency, pertain to sections of the Truth in Lending Act and Consumer Leasing Act as amended by the Dodd-Frank Act.
Both laws establish important protections for borrowers, including requirements that lenders fully disclose the terms of a loan or lease. Dodd-Frank included exemptions to some of those terms, however, for loans or leases below a certain value, and that value is tied to the rate of inflation as calculated by the Bureau of Labor Statistics.
The first proposal concerns new appraisal requirements added to the Truth in Lending Act by Dodd-Frank that require that creditors acquire a written appraisal "based on a physical visit to the home's interior" for certain higher-priced mortgage loans. The law exempted loans of less than $25,000 from that requirement, however.
The second proposal concerns other consumer credit and leasing agreements, including auto loans and real property. Those laws include exemptions for leases concerning property valued at more than $50,000 — a figure that was adjusted from $25,000 with the Dodd-Frank amendments.
Under both proposals, the CFPB or Fed would annually adjust the exemption level based on any changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W. If there was no change from year to year in the CPI-W, the agencies would leave the threshold unchanged. The proposal would formalize the approach that the agencies have taken toward the thresholds since the Dodd-Frank amendments went into effect in 2011.