On December 12, 2013 the Federal Reserve Board, The Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency jointly published a final rule that creates exemptions from certain appraisal requirements for a subset of higher-priced mortgage loans. The exemptions are intended to save borrowers time and money while still ensuring that the loans are financially sound.
The appraisal requirements for higher-priced mortgages apply to closed-end mortgage loans if they are secured by a consumer’s principal dwelling and have interest rates above a certain threshold. Creditors are required to obtain a written appraisal based on a physical visit of the home’s interior before making these loans.
Effective on January 18, 2014 the final rule exempts:
- Until July 18, 2015, all loans secured in whole or in part by a manufactured home;
- Loans of $25,000 or less; and
- Certain “streamlined” refinancings.
In addition, the final rule contains special provisions for manufactured homes. Effective on July 18, 2015, loans secured by
- An existing manufactured home and land will be subject to the appraisal requirements.
- A new manufactured home and land will be exempt only from the requirement that the appraiser visit the home’s interior.
- Manufactured homes without land will be exempt from the rules if the creditor gives the consumer one of three types of information about the home’s value:
- The manufacturer’s invoice of the unit cost (for a transaction secured by a new manufactured home).
- An independent cost service unit cost.
- A valuation conducted by an individual who has no financial interest in the property or credit transaction, and has training in valuing manufactured homes. An example would be an appraisal conducted according to procedures approved by the U.S. Department of Housing and Urban Development (HUD) for existing (used) home-only transactions.
A copy of the final rule is available here.