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Agencies Issue Proposed Rule on Appraisals for Higher-Risk Mortgages

Joint Release                                                                 Board of Governors of the Federal Reserve System 
Consumer Financial Protection Bureau
Federal Deposit Insurance Corporation
Federal Housing Finance Agency
National Credit Union Administration
Office of the Comptroller of the Currency


For immediate release                                                                                                                August 15, 2012
Agencies Issue Proposed Rule on Appraisals for Higher-Risk Mortgages 
WASHINGTON— Six federal financial regulatory agencies today 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 enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  Under the Dodd-Frank Act, 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.
The proposed rule is being issued by the Board of Governors of the Federal Reserve System, 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.
The Federal Register notice is attached.  The agencies are seeking comments from the public on all aspects of the proposal.  The public will have 60 days, or until October 15, 2012, to review and comment on most of the proposal.  However, comments related to the proposed Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register.  Publication of the proposal in the Federal Register is expected shortly.
The proposed rule is available here. 

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Media Contacts:
​Federal Reserve ​Susan Stawick ​(202)-452-2955
​CFPB ​Moira Vahey ​(202) 435-9151
​FDIC ​Greg Hernandez ​(202) 898-6984
​FHFA ​Stefanie Johnson ​(202) 649-3030
​NCUA ​Kenzie Snowden ​(703) 518-6334
​OCC ​Bryan Hubbard ​(202) 874-5770


NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 101 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.


National Credit Union Administration

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John Fairbanks
Office: 703.518.6336
Mobile: 571.438.0801

Ben C. Hardaway
Office: 703.518.6333
Mobile: 703.298.5223

Kenzie Snowden
Office: 703.518.6334

"Protecting credit unions and the consumers who own them through effective regulation"