Both very small mortgages and some "streamlined" refinancings will exempted from certain of the appraisal requirements for higher-priced mortgages (the agencies use the term "higher-priced" as opposed to the original term "higher risk") set to go into effect in January. In a joint release six federal regulators said that the exemptions are intended to save borrowers time and money while still ensuring that the loans are financially sound.
Under the Dodd-Frank Act higher-priced loans, those with interest rates above a certain threshold, are required have a written appraisal based on a physical inspection of the homes' interior. The new regulations will exempt loans, either for refinancing or home purchase, with a principal balance under $25,000 from this requirement. The dollar amount of this exemption will be indexed each year for inflation.
Also exempted from the appraisal requirement are streamlined refinances as long as the loans do not feature negative amortization or interest only terms and the 'credit risk holder' (which can either mean the lender or the insuring agency) remains the same on the new loan as on the old.
The final rule also contains special provisions for manufactured homes which will be exempted from the appraisal requirements until July 18, 2015. After that data loans secured by an existing manufactured home and land will be subject to an interior inspection and written appraisal. A loan secured by a new manufactured home and land will not require a physical inspection of the interior of the home and a loan secured only by the manufactured home without land can be valued by methods other than an appraisal such as by use of a book value.
The clarification to the appraisal rule was issued by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and the Office of the Comptroller of the Currency
