Regulators Propose Exemptions to Upcoming Dodd-Frank Appraisal Rules
The NCUA and five other agencies on Wednesday issued a proposed rule that would exempt some higher-priced mortgage loans from certain appraisal requirements.
The rule would exempt from Dodd-Frank Act appraisal requirements: loans of $25,000 or less; certain “streamlined” refinancings; and certain loans secured by manufactured housing. The banking reform act considers loans to be higher-priced if they are secured by a borrower’s home and have interest rates of a certain threshold, the agencies’ announcement said.
“The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors,” said the announcement from the NCUA, FDIC, CFPB, FHFA, Federal Reserve Board and the Office of the Comptroller of the Currency.
The public has until Sept. 9 to comment on the proposed rule, expected to be published in the Federal Register shortly, the agencies said.
The 132-page Federal Register notice is available online.
The new rule is in response to public comments gathered after the January 2013 implementation of a final rule on Dodd-Frank appraisal requirements that requires compliance on Jan. 18, 2014, the agencies said.
That rule, approved in January by the NCUA, requires 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.
Also, 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.
Mortgage lenders will also be required to provide homebuyers with a free copy of the appraisal, according to the final rule released in January.
Loans exempted from that 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.