Interagency Rule Increases Appraisal Requirements for Higher-Risk Mortgages
A final interagency rule released this week that increases higher-risk mortgage appraisal requirements appears to be very similar to the proposed rule.
The rule, which includes the NCUA among other federal regulators, will require lenders who offer higher-risk mortgages to use licensed or certified appraisers who must prepare written reports, based on physical inspections of a home's interior, when they determine the value of a given home.
Mortgage lenders will also be required to provide homebuyers with a free copy of the appraisal, according to the final rule released late Tuesday.
In an attempt to address fraudulent flipping, sellers who purchased the home for less than the current sale price within the past six months must also provide to the homebuyer additional documentation that details the difference in sale prices, any changes in market conditions, and any improvements that have been made to the property since it was purchased by the current owner. Loans exempted from the rule include mortgages secured by manufactured homes, mobile homes, boats or trailers, construction loans and loans with maturities of 12 months or less if a “bridge” loan.
The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014. The NCUA Board approved the rule during its Jan. 10 board meeting.