Agencies Adopt Final Rules Exempting Certain Higher-Price Mortgage Loans from Appraisal Requirements

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.

Read More: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20131212a.htm

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