Six federal financial regulatory agencies on Jan. 18 issued a joint final rule establishing 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 the Dodd-Frank Act.
The final rule requires 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 mandates that creditors disclose information about the appraisal’s purpose and provide consumers with a free copy of the appraisal report. Creditors also must 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.
Also on Jan. 18, the CFPB approved a final revised regulation requiring creditors to provide to applicants free copies of all appraisals done in connection with an application for a first mortgage. The rule also requires creditors to notify applicants in writing that copies of appraisals will be provided to them promptly
ABA filed comments supporting most of the agencies' proposed rule on appraisals for higher risk mortgages and stated the rule was consistent with the Dodd-Frank Act's requirements. ABA also commended the CFPB on its well-crafted appraisal rule, which included necessary safeguards to assist banks in their compliance efforts. ABA offered a number of technical comments and asked for flexibility that would allow for time waivers so that consumers can avoid unnecessary closing delays.
- Proposed Rule on Appraisal Management Companies, April 15, 2014
- ECOA Commercial Loan FAQs, September 4, 2013
- ABA Staff Analysis: Proposed Amendments to the 2013 Mortgage Rules under the ECOA (Reg B), RESPA (Reg X), and TILA (Reg Z), July 2013
- ABA Staff Analysis: Final Rule Regarding Appraisal Requirements for Higher-Risk Mortgages, April 2013
- ABA Staff Analysis: Disclosure and Delivery for Copies of Appraisals and Other Written Valuations under ECOA (Reg B) April 2013
- Analysis of Joint Proposal on Appraisals for Higher-Risk Mortgages, September 2012
- Analysis of CFPB's Proposed Rule to Improve Consumer Access to Appraisal Reports, August 21, 2012
- ABA Staff Analysis: Interagency Appraisal Guidelines, January 3, 2011
- Appraisal Independence Rules November 1, 2010
- Joint Request to FFIEC for ASC Extension, September 14, 2012
Rules & Guidance