August 16, 2012
Six US Regulators Announce Common Appraisal Rules for High Risk Mortgages
A common set of appraisal rules for “high risk mortgages” has been proposed by the six principle regulators of banks and credit unions in the USA: Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and the Office of Comptroller of the Currency. A “high risk mortgage” is defined with reference to annual percentage rate (APR) of the transaction. It excludes all “qualified mortgages” under the Dodd-Frank Act of 2010 (still to be finalized). The proposed rules include the requirement for a written appraisal by a qualified appraiser that includes an interior inspection of the property, and a second appraisal if the property is the consumer’s principal dwelling or if the seller acquired the property within the previous 180 days at a lower price than the current sales price. The applicant must be provided the statement regarding the purpose of the appraisal and a copy of the written appraisal at least three days before closing. Comments are sought until October 15, 2012. The agencies asked specifically for comments addressing the proposed amendment to the method of calculating the APR, which is being proposed by CFPB as part of other mortgage-related rules.
[Link to Proposed Regulation]