Federal Agencies Announce Increased Regulations Z and M Dollar Thresholds for Exempt Consumer Credit and Lease Transactions, and Higher Threshold for Exemption from Mortgage Loan Appraisal Requirements

Troutman Pepper

On October 13, the Consumer Financial Protection Bureau, the Federal Reserve Board, and the Office of the Comptroller of the Currency announced increased dollar thresholds used to determine whether certain consumer credit and lease transactions in 2023 are exempt from Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).

Specifically, based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), Regulation Z and Regulation M generally will apply to consumer credit transactions and consumer leases of $66,400 or less, in 2023. Transactions at or below the thresholds are subject to regulation protection. However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the loan amount. This threshold is also important at the state level, as several states tie the applicability thresholds for their own lending laws to the Regulation Z threshold.

The same federal agencies further announced that the 2023 threshold for exempting loans from special appraisal requirements will increase from $28,500 to $31,000. The Dodd–Frank Act added special appraisal requirements for higher-priced mortgage loans, including requiring that creditors obtain a written appraisal based on a physical visit to the home interior before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases.

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