Six federal financial regulatory agencies today issued a final rule that creates exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The exemptions are intended to save borrowers time and money while still ensuring that the loans are financially sound.
The appraisal requirements for higher-priced mortgages were established by Section 1471 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under Section 1471, closed-end mortgage loans are considered to be higher-priced if they are secured by a consumer’s home and have interest rates above a certain threshold. Section 1471 requires creditors to obtain a written appraisal based on a physical visit of the home’s interior before making these loans.
The final rule provides that loans of $25,000 or less and certain “streamlined” refinancings are exempt from the Section 1471 appraisal requirements, which go into effect on January 18, 2014.