Regulatory Compliance
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Higher Priced Mortgage Appraisal Proposed Rules

With the end of the comment period quickly approaching for many of the newly proposed Consumer Financial Protection Bureau (CFPB) rules, I thought I would take the opportunity to talk specifically about one of those proposals. If you recall at the beginning of the month, I mentioned that the CFPB had proposed new rules that would amend Regulation B and the Equal Credit Opportunity Act with respects to providing appraisals and valuations to mortgage loan applicants. Along with this rule, the CFPB also issued a proposed rule on obtaining appraisals for “higher-risk” mortgage loans.

On August 15th, the CFPB released the proposed rule that would amend Regulation Z and the Truth-in Lending Act. These rules would add new requirements for lenders who offer “higher-risk” mortgage loans.

The rules include the following requirements:

  • For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. 
  • The proposed rule also would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report, three days before closing on the mortgage.
  • Creditors would 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 past 180 days.  This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased.

 As a reminder, if you would like to comment on this rule, the deadline is October 15th.

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