The CFPB, FDIC, OCC, National Credit Union Administration, Federal Housing Finance Agency and Federal Reserve Board of Governors recently released a final rule requiring appraisals for “higher-priced mortgages.”
Higher-priced mortgages are generally secured by a consumer’s home and carry interest rates above a certain threshold. The rule requires creditors to use a licensed appraiser who prepares an appraisal report based on his or her assessment of the property’s interior, to disclose to applicants the purpose of the appraisal and to provide the consumer with a free copy of an appraisal report.
Additionally, if the seller purchased the property for a lower price within the past six months and if the price difference exceeds a certain amount, creditors will be required to obtain a second appraisal, which is designed to prevent fraudulent property flipping by ensuring that the actual property value has increased.
The rule, which is set to take effect in January 2014, exempts certain loans, including qualified mortgages, loans for news manufactured homes, mobile home loans, houseboats and trailers, temporary bridge loans and construction loans.
The issuing agencies plan to publish a supplemental proposal to request additional public comment on potential exemptions for “streamlined” refinance programs and small-dollar loans, as well as to determine whether the rule should apply to existing manufactured home loans and other property types.