Appraisals Summit


Six
federal regulators proposed a rule to establish new appraisal requirements for
"higher-risk mortgage loans" as mandated by the Dodd-Frank Act. A
mortgage loan is higher-risk if it is secured by a consumer's home and has an
interest rate 1.5 percentage points above the average prime rate. Under the
proposed rule, lenders would be required to disclose to mortgage applicants information
about the purpose of the appraisal and provide consumers with a free copy of
any appraisal report. Lenders would also 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 within the previous
six months.

Additionally,
the CFPB issued a proposed rule that would amend Regulation B and would require
creditors to provide mortgage applicants with a copy of written appraisals and
home value estimates.  Creditors would have three days after receipt of an
application to inform consumers of their right to receive a free copy of an
appraisal report or home value estimate used in connection with the
transaction.  Under the proposed rule from the CFPB, creditors could still
charge reasonable fees associated with conducting appraisals and home value
estimates; however, the rule would prohibit creditors from charging consumers
fees for obtaining the reports.  IBAT will be issuing comment letters arguing
against the proposed appraisal rules because they would increase the cost to
borrowers and may be unworkable in rural Texas communities. The joint proposed
rule is available here. The CFPB proposed rule is available here. The public has until October 15 to comment
on each proposal.

IBAT is offering a Summit dedicated entirely to appraisals on August
30, 2012. Topics range from an overview of the appraisals process to compliance
with applicable real estate regulations.