Both very small mortgages and
some "streamlined" refinancings will exempted from certain of the
appraisal requirements for higher-priced mortgages (the agencies use the term "higher-priced" as opposed to the original term "higher risk") set to go into effect in
January. In a joint release six federal
regulators said that the exemptions are intended to save borrowers time and
money while still ensuring that the loans are financially sound.
Under the Dodd-Frank Act
higher-priced loans, those with interest rates above a certain threshold, are
required have a written appraisal based on a physical inspection of the homes'
interior. The new regulations will
exempt loans, either for refinancing or home purchase, with a principal balance
under $25,000 from this requirement. The
dollar amount of this exemption will be indexed each year for inflation.
Also exempted from the
appraisal requirement are streamlined refinances as long as the loans do not
feature negative amortization or interest only terms and the 'credit risk holder' (which can either mean the lender or the insuring agency) remains
the same on the new loan as on the old.
The final rule
also contains special provisions for manufactured homes which will be exempted
from the appraisal requirements until July 18, 2015. After that data loans secured by an existing
manufactured home and land will be subject to an interior inspection and written
appraisal. A loan secured by a new
manufactured home and land will not require a physical inspection of the
interior of the home and a loan secured only by the manufactured home without
land can be valued by methods other than an appraisal such as by use of a book
to the appraisal rule was issued by the Board of Governors of the Federal Reserve System, Consumer
Bureau, Federal Deposit Insurance
Corporation, Federal Housing Finance Agency, National Credit
Union Administration, and the Office of the Comptroller of the Currency
Federal Registrar Notice