A Dodd-Frank Act-mandated joint final rule will establish new appraisal requirements for “higher-risk mortgage loans.” Mortgage loans secured by a consumer’s home with interest rates above a certain threshold are considered higher-risk under Dodd-Frank.
The rule will require creditors making such loans to use a licensed or certified appraiser to prepare a written report based on a physical inspection of the property’s interior. It also will mandate that creditors disclose information about the appraisal’s purpose and provide consumers with a free copy of the appraisal report.
Creditors also will have to obtain an additional appraisal at no cost to the consumer for a home-purchase higher-risk mortgage loan if the seller acquired the property for a lower price during the previous six months. The requirement is intended to address fraudulent property-flipping by seeking to ensure that the value of the property used as loan collateral legitimately increased.
The rule, which will go into effect on Jan. 18, 2014, is being issued by the Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Reserve, National Credit Union Administration and Federal Housing Finance Agency.
Read FDIC Staff memo on the rule.
Read the final rule.
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