1. Under the new appraisal rules, if we have an HPML loan request that is under the FIRREA threshold of $250,000, do we still need to get an appraisal that would include a physical inspection of the interior of the property, conducted by a certified or licensed appraiser?
2. If a property is taken as abundance of caution on an HPML deal, do we need to follow the Reg Z appraisal rules on that property? Assume the property taken as abundance of caution is the principal residence.
1) There is not a dollar threshold exemption, but there is a proposal out that would exempt loans of $25,000 or less. So the $250,000 threshold will not come into play for appraisals on HPMLs.
2) As for abundance of caution collateral, the regulation states except for the exemptions provided a creditor shall not extend a higher-priced mortgage loan to a consumer without obtaining, prior to consummation, a written appraisal of the property to be mortgaged. In my opinion, that means would apply to any property mortgaged as collateral.
Here are the exemptions to the HPML appraisal requirements: 12 CFR 1026.35(c)(2) Exemptions. The requirements in paragraphs (c)(3) through (6) of this section do not apply to the following types of transactions:
(i) A qualified mortgage as defined in 12 CFR 1026.43(e).
(ii) A transaction secured by a new manufactured home.
(iii) A transaction secured by a mobile home, boat, or trailer.
(iv) A transaction to finance the initial construction of a dwelling.
(v) A loan with maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer’s principal dwelling.
(vi) A reverse-mortgage transaction subject to 12 CFR 1026.33(a).