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CUNA releases high-priced mortgage rule analysis
WASHINGTON (2/1/13)--New regulations that will require lenders offering higher-priced mortgages to use licensed or certified appraisers are the subject of a Credit Union National Association final rule analysis.

The regulations were approved by the National Credit Union Administration and other federal financial regulators this month. Under the terms of the new regulations, mortgage lenders will need to hire licensed appraisers to perform a physical inspection of a home's interior before making a loan that falls within the definition of a higher-priced mortgage loan. Lenders will need to provide homebuyers with a free copy of the resulting home appraisal report.

High-priced mortgages will be considered non-qualified residential mortgages that are secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for junior lien loans.

The rule provides a safe harbor for compliance purposes, as well as exemptions for several types of transactions, including "qualified mortgages" and reverse mortgages. The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014. The CUNA analysis notes that the final rule narrows from the proposal the scope of a requirement for obtaining a second appraisal for certain "flipped" properties. Under the final rule, creditors are required to obtain a second written appraisal, at no cost to the borrower, if the property is being resold within a 180-day period, and:
  • For a property being resold within 90 days of acquisition, the sale price exceeds the price the property was acquired for by more than 10%; or
  • For a property being resold within 91 to 180 days of acquisition, the sale price exceeds the price the property was acquired for by more than 20%.
For the final rule analysis, use the resource link.

CUNA also plans to report on the details of other mortgage issues addressed by recent CFPB regulatory releases, including:
  • Mortgage servicing;
  • Mortgage loan originator compensation;
  • Ability-to-repay requirements;
  • Escrow accounts; and
  • "High-cost" mortgages.
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