Six federal financial regulatory agencies have issued a proposed rule to establish new appraisal requirements for "higher-risk mortgage loans." The proposed rule would implement amendments to the Truth in Lending Act (TILA) enacted by the Dodd-Frank Act. The Dodd-Frank Act defines mortgage loans as higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.
For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser to prepare a written report based on a physical inspection of the interior of the property. The proposed rule 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.
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 six months. This requirement would seek to ensure that the value of the property being used as collateral for the loan legitimately increased.
The proposed rule is being issued by the Federal Reserve, CFPB, FDIC, FHFA, NCUA, and the OCC.
The agencies are seeking comments on all aspects of the proposal due by October 15.
Read the proposed rule.