Certain higher-priced real estate deals will be exempt from certain appraisal requirements outlined in the Dodd-Frank Act under a proposed rule introduced Wednesday by six federal financial regulatory agencies.
The proposed rule in effect modifies a final rule in the Dodd-Frank Act approved in January that delineates new appraisal requirements for lenders. It was drafted by members of the Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Federal Housing Finance Agency (FHFA), National Credit Union Administration and Office of the Comptroller of the Currency in response to feedback from industry stakeholders.
The proposed rule would create exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The exemptions are intended to save borrowers time and money, as well as promote the safety and soundness of creditors, the FHFA said in a press release.
As per the Dodd-Frank Act, loans are considered higher priced if they are secured by a consumer's home and have interest rates above a certain threshold.
Under the proposed rule, three types of loans would be exempt from the appraisal requirements – loans of $25,000 or less, certain "streamlined" refinancings and certain loans secured by manufactured housing.
The agencies are soliciting feedback on the proposal. The public will have until Sept. 9 to review and comment.
The new appraisal requirements are scheduled to go into effect on Jan. 18, 2014.
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