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Fed agencies issue appraisal rules for higher-priced mortgages

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Six federal financial regulatory agencies including the Federal Reserve Board, Federal Housing Finance Agency and the Federal Deposit Insurance Corporation issued a final lending rule, which establishes new appraisal requirements for "higher-priced mortgage loans."

The rule requires creditors to use a licensed or certified appraiser who prepares a report based on a visit of the interior of the property. Creditors also are required to disclose to applicants information about the purpose of the appraisal and provide consumers with a copy of the report.

The Consumer Financial Protection Bureau also released a rule Friday that requires lenders to offer consumers with free copies of appraisals.

Creditors will have to obtain a second appraisal at no cost to the consumer if the seller acquired the property for a lower price during the previous six months, and the price difference exceeds specific thresholds.

"This requirement for higher-priced home-purchase mortgage loans is intended to address fraudulent property flipping by seeking to ensure that the value of the property legitimately increased," the Fed said.     

The rule implements amendments to the Truth in Lending Act, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

"Under the Dodd-Frank Act, mortgage loans are higher-priced if they are secured by a consumer's home and have interest rates above certain thresholds," the Fed noted.

The rule exempts several types of loans including qualified mortgages, temporary bridge loans and loans for mobile homes. 

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