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Subset of higher-priced mortgages receive appraisal exemptions

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A separate subset of higher-priced mortgage loans are exempt from certain appraisal requirements to help save borrowers time and money while still ensuring that the loans are financially sound.

The Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Association and the Office of the Currency of the Comptroller came together to revise certain aspects of Dodd-Frank.

Under Dodd-Frank, 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. As a result, creditors are required to obtain a written appraisal based on a physical visit to the home before making the loan.

But under the new provision, loans of $25,000 or less and certain “streamlined” refinancings are exempt from the Dodd-Frank Act appraisal requirements that go into effect on Jan. 18, 2014.

The final rule also allows the requirements for manufactured homes to be postponed until July 18, 2015, since they can be difficult to appraise.

However, they are only exempt on the appraiser having to visit the home. Creditors will instead need to use other valuation methods without an appraisal, such as third-party valuation services or “book values.”

Compliance with the January 2013 final rule will become mandatory on Jan. 18, 2014.

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