In response to public comments, six federal agencies recently issued a proposed rule that would exempt three types of higher-priced mortgage loans from the current appraisal requirements that are outlined in the Dodd-Frank Act – which were approved last January. The intent of these exemptions is to promote the safety and soundness of creditors and to save borrowers time and money.
Though appraisals are, and will remain, required for higher-priced mortgage loans under the Dodd-Frank Act, the newly proposed rule would exempt a subset of higher-priced mortgage loans from the requirement. These mortgage loans include loans of $25,000 or less, loans secured by existing manufactured homes (not land), and certain types of “streamlined” refinancings.
The proposed rule and its exemptions were drafted by members of the Federal Reserve Board, Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corp (FDIC), Federal Housing Finance Agency (FHFA), National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC) – the same federal agencies that issued the original appraisal requirements for higher-priced mortgage loans.
These six federal agencies are currently seeking public comments on all aspects of the proposal, and those interested on submitting their opinions will have until September 9, 2013 to do so.
To recap, the Dodd-Frank Act considers a mortgage loan to be higher-priced if it is secured by a consumer’s home and has an interest rate above a certain threshold. The new appraisal requirements for higher-priced mortgage loans are scheduled to take effect on January 18, 2014.