ABA Dodd-Frank Tracker

Regulators Issue Proposal to Increase Mandatory CRE Appraisal Thresholds

2017-07-20T10:34:00.001-04:00

The federal regulatory agencies issued a proposal to increase the threshold for required appraisals for commercial real estate transactions from $250,000 to $400,000 following the FDIC’s board meeting. The proposal reflects feedback the agencies received through the Economic Growth and Regulatory Paperwork Reduction Act process. Comments on the proposal will be due 60 days after the notice is published in the Federal Register.

In response to growing concerns over a lack of certified appraisers, particularly in rural areas, the federal banking agencies earlier this year also issued a reminder of two existing approaches that institutions can use to address appraiser shortages, particularly in rural areas. The first approach, temporary practice permits, allows state-certified or licensed appraisers to provide services in other states. The second involves a temporary waiver request to use a state-certified or licensed appraiser in situations where a documented appraiser shortage has led to “significant delays” in appraisals on federal related transactions in a specific geographic area.

ABA has been working closely with regulatory agencies, Congress and the Appraisal Qualifications Board to obtain meaningful relief from stringent appraisal requirements. The association will comment on the proposal and will continue to seek further improvements.

Read the proposal.

Agencies Remind Banks of Appraisal Waiver Process

2017-06-01T11:30:00.000-04:00

With financial institutions – especially those in rural areas – facing a critical shortage of qualified appraisers that is slowing down closing times, the federal banking agencies issued a reminder of two existing approaches that they said institutions can use to ease the crunch.

The first approach, temporary practice permits, allows state-certified or licensed appraisers to provide services in other states. The second involves a temporary waiver request. A financial institution facing documented scarcity of appraisers that has led to “significant delays” in appraisals on federally related transactions in a specific geographic area may apply to the Appraisal Subcommittee for a temporary waiver of the requirement to use a state-certified or licensed appraiser. (Other appraisal requirements, such as those calling for appropriate valuation education or experience with the type of property being appraised, would still apply.)

The agencies said they will work through their representatives on the ASC and the Federal Financial Institutions Examination Council, which must also approve waiver requests, to “streamline the process” for submitting requests. The ASC is required to issue decisions on waiver requests within 15 days after the close of a 30-day public comment period.

ABA has been working closely with regulatory agencies, Congress and the Appraisal Qualifications Board to obtain meaningful relief from stringent appraisal requirements and will continue to seek further improvements.

Read the notice.

CFPB Updates Rulemaking Agenda for Remainder of Year

2016-05-23T09:45:00.002-04:00

The CFPB updated its rulemaking agenda for the remainder of 2016. According to the agenda, the bureau expects to issue final rules on consumer protections for prepaid cards and on mortgage servicing early this summer.

The bureau is also expected to release a proposed rule on small-dollar loans on June 2. In addition to the proposed rule on arbitration agreements issued earlier this spring, the CFPB also said it is working on proposed rules related to appraisals and, at the urging of ABA, providing clarity on the TILA-RESPA integrated disclosures. It is also continuing with its early-stage rulemaking activities on overdrafts, debt collection and lending to small businesses.

View the agenda.

Gruenberg: Agencies Revisiting Thresholds for Appraisal Rules

2015-12-03T09:31:00.001-05:00

The banking agencies are revisiting the dollar thresholds for their appraisal requirements, FDIC Chairman Martin Gruenberg said in Arlington, Va., at the final outreach meeting for the decennial EGRPRA review.

Gruenberg added:

Based largely on comments we have received during these outreach sessions, we have formed an interagency working group to review the appropriateness of dollar thresholds for transactions requiring appraisals and other requirements of the interagency appraisal regulations.

The interagency rules require appraisals for real estate transactions valued at over $250,000 and business loans valued at over $1 million when not dependent on real estate income as a source of repayment.

Gruenberg also highlighted actions by the FDIC to clarify the process of applying for deposit insurance and — as advocated by ABA — to clarify how the agency handles requests for exceptions to limits on dividends paid by S-corporation banks. The exceptions help to address, and in some cases remedy, a disadvantage for S-corp banks in Basel III’s capital buffer provision.

Gruenberg went on to say:

We will continue to look for other ways to reduce or eliminate outdated or unnecessary requirements as we move forward with this review. As you can see, we still have a lot of work to do.

Fannie, Freddie Issue Guidance on TRID Compliance, Putbacks

2015-10-08T09:44:00.000-04:00

Fannie Mae and Freddie Mac issued letters to the mortgage lenders they work with explaining their posture toward compliance with the TILA-RESPA integrated disclosures, which went into effect for new mortgage applications on Saturday.

Fannie and Freddie said they are “aware that some lenders continue to address the implementation of TRID’s technical requirements. In recognition of this, until further notice, [the GSEs] will not conduct routine post-purchase loan file reviews for technical compliance with TRID.” After this “transitional period,” the GSEs said, they will revisit “whether to begin such reviews for technical compliance.”

Instead, Fannie and Freddie will “evaluate whether the correct forms were used in connection with the origination of a mortgage loan,” which they identified with a good-faith effort to comply. “[F]ailure to use a TRID-required form will be deemed a violation of the good faith efforts standard and will render the mortgage loan subject to all contractual remedies, including repurchase,” they said.

Read Fannie’s guidance.
Read Freddie’s guidance.

Agencies Propose Standards for State Appraisal Regulations

2014-03-25T07:37:00.002-04:00

The federal financial agencies, along with the regulator of Fannie Mae and Freddie Mac, yesterday proposed minimum requirements for state supervision of appraisal management companies. The proposed rules were issued under the Dodd-Frank Act.

The rule would not require states to regulate AMCs, but if states do, AMCs must register in the state, use only state-certified or licensed appraisers for federally related transactions and ensure appraisals are independent. The rule also proposes specific powers and authorities for the state agencies.

Read the proposed rule.

The Week Ahead: December 16 - December 20

2013-12-13T09:56:00.000-05:00

Tuesday

ABA Telephone Briefing: Municipal Adviser Registration Read more.

Wednesday

ABA Telephone Briefing/Webcast: The Basics of Quality Assurance in Residential Appraisal Read more.

Please Note that the House will begin Recess this Friday, December 13 and will resume in 2014.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Join Us at the Premier Event for Community Bank CEOs — Our banker working group is designing a program that will provide information and advice on the latest industry developments and challenges, legislative and regulatory actions, and products and services available to community bankers. Register!

Agencies Propose Appraisal Rule Amendments

2013-07-11T08:25:00.003-04:00

Six financial regulators proposed amendments to their joint final rule on appraisal requirements for higher-risk mortgage loans. The rule, which takes effect January 18, 2014, applies to mortgage loans secured by a consumer’s home with interest rates above a certain threshold.

The proposed amendments would exempt from the rules “streamlined refinancings” -- that is, transactions in which the owner or guarantor of the refinance loan is also the owner or guarantor of the existing loan; the refinance loan does not result in negative amortization, interest-only payments, or balloon payments; and the refinance loan’s proceeds go only to the existing loan’s outstanding balance and closing costs.

The amendments also would exempt loans secured solely by existing manufactured homes and not land, as well as loans of less than $25,000.

Comments on the proposal are due by September 9.

Read more.

New Appraisal Rule for Higher-Risk Mortgages

2012-08-21T09:07:00.001-04:00

Last week the banking agencies proposed a rule to establish new appraisal requirements for "higher-risk mortgage loans." Under Dodd-Frank, mortgage loans are higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.

For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. The proposed rule also would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

Creditors would 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 during the past six months. This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased.

Read the proposed rule.

Agencies Issue Proposed Rule on Appraisals for Higher-Risk Mortgages

2012-08-15T11:21:00.000-04:00

Six federal financial regulatory agencies have issued a proposed rule to establish new appraisal requirements for "higher-risk mortgage loans." The proposed rule would implement amendments to the Truth in Lending Act (TILA) enacted by the Dodd-Frank Act. The Dodd-Frank Act defines mortgage loans as higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.

For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser to prepare a written report based on a physical inspection of the interior of the property. The proposed rule would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

Creditors would 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 during the past six months. This requirement would seek to ensure that the value of the property being used as collateral for the loan legitimately increased.

The proposed rule is being issued by the Federal Reserve, CFPB, FDIC, FHFA, NCUA, and the OCC.

The agencies are seeking comments on all aspects of the proposal due by October 15.

Read the proposed rule.

Regulators Release Updated Guidance on Real Estate Appraisals

2010-12-03T07:22:00.002-05:00

The federal financial regulatory agencies issued final supervisory guidance on sound practices for real estate appraisals and evaluations. These long-awaited guidelines were proposed in November 2008, and replace older guidelines that were issued in 1994.

This new issuance explains the agencies' minimum regulatory standards for appraisals. In summary, the guidelines incorporate the agencies' recent supervisory issuances on appraisal practices, address advancements in information technology used in collateral valuation practices, and clarify standards for the industry's appropriate use of analytical methods and technological tools in developing evaluations.

Read the guidance here.

Telephone Briefing on Compliance Priorities

2010-11-23T09:15:00.003-05:00

At 2 p.m. EST today, ABA staff experts will present a two-hour telephone briefing, “Compliance Priorities for 2011-- Pending and Prospective.” Open to all, the briefing will cover the status of pending compliance requirements, Consumer Financial Protection Bureau developments and what to prepare for in 2011. Topics include:

Dodd-Frank implementation news
What to expect from the new Consumer Protection Bureau
Mortgage Reform – appraisal, S.A.F.E. & Reg Z Acts
Risk-based pricing and credit score disclosure
Community Reinvestment Act update
Overdraft protection
BSA/AML alerts
UDAP enforcement cases
Privacy notice simplification
Americans with Disabilities Act and ATMs

Rule to Ensure Appraisers Use Own Judgment Published in Federal Register

2010-10-29T10:25:00.001-04:00

The Federal Reserve yesterday published in the Federal Register its interim final rule -- mandated by the Dodd-Frank Act -- that is intended to ensure that real estate appraisers can use their independent judgment in assigning home values, and that they receive customary and reasonable payments for their services. The rule also includes several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan. The comment deadline is Dec. 27. The rule’s mandatory compliance date is April 1, 2011.

Read the interim final rule.

Federal Reserve Issues Rule on Appraisers

2010-10-19T13:44:00.014-04:00

The Federal Reserve on October 18 issued an interim final rule under the Dodd-Frank Act that is intended to ensure that real estate appraisers can use their independent judgment in assigning home values. The rule also includes several provisions designed to protect the integrity of the appraisal process when a consumer's home is securing the loan. The rule prohibits coercion and similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment, and prohibits creditors from extending credit based on appraisals if they know beforehand about violations involving appraiser coercion or conflicts of interest. The rule is effective April 1, 2011, and there will be 60-day comment period after its publication in the Federal Register. Finally, the rule requires the payment of reasonable and customary compensation to appraisers.

Fed Issues Rule to Ensure Appraisers Use Own Judgment

2010-10-19T10:36:00.004-04:00

The Federal Reserve yesterday issued an interim final rule -- mandated by the Dodd-Frank Act -- that is intended to ensure that real estate appraisers can use their independent judgment in assigning home values, and that they receive customary and reasonable payments for their services. The rule also includes several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan...

The interim final rule prohibits coercion and similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment; bans appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions; and prohibits creditors from extending credit based on appraisals if they know beforehand about violations involving appraiser coercion or conflicts of interest.

The rule also requires creditors or settlement service providers to file reports with the appropriate state licensing authorities if they have information about appraiser misconduct. It also mandates the payment of reasonable and customary compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors.

The rule’s mandatory compliance date is April 1, 2011. There will be 60-day comment period after its publication in the Federal Register. Read more. Read the interim final rule.