ABA Dodd-Frank Tracker

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.