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The bank made a “higher-priced mortgage loan” (HPML) last year and obtained two appraisals. If the borrower wishes to refinance, must the bank again obtain two appraisals?

No. The requirement to obtain an additional appraisal for certain HPMLs under §1026.35(c)(4) of Regulation Z applies only to transactions that finance the acquisition of the consumer’s principal dwelling. Assuming that the refinancing transaction remains a HPML, however, it may require a new appraisal, unless the one of the exemptions under §1026.35(c)(2) applies. For example, per §1026.35(c)(2)(vii), the provisions generally would not apply to a refinancing of a covered loan secured by a first lien provided: either the credit risk is retained by the original creditor or the loan was insured by the same Federal government agency that insured or guaranteed the original obligation; the regular periodic payments under the new loan do not cause the principal balance to increase, allow the consumer to defer repayment of principal, or results in a balloon payment; and the proceeds of the loan are used solely to satisfy the existing obligation and amounts attributed solely to the costs of refinancing. (May 2018)

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