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NCUA approves high-risk mortgage appraisal rules
WASHINGTON (1/16/13)--The National Credit Union Administration and federal bank regulators have approved rules that will require lenders offering higher-risk mortgages to use licensed or certified appraisers.

The appraisers will need to prepare written reports, based on physical inspections of a home's interior, when they determine the value of a given home.

Mortgage lenders will also be required to provide homebuyers with a free copy of the resulting home appraisal report. If the seller of a given home has purchased the home for less than the current sale price within the last six months, an additional appraisal document will also need to be provided to the homebuyer. The document will need to detail the difference in sale prices, any changes in market conditions, and any improvements that have been made to the property since it was purchased by the current owner. This requirement is an attempt to address fraudulent property flipping.

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.

Safe harbors and exemptions will be provided in some cases.

The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014. The Credit Union National Association is analyzing the NCUA regulations and will post a summary soon.

The new mortgage appraisal requirements are mandated by the Dodd-Frank Wall Street Reform Act. They are a joint rulemaking effort between the NCUA, Consumer Financial Protection Bureau (CFPB), Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and other federal financial agencies.

For the full regulation, as approved by the FDIC on Tuesday, use the resource link.

The CFPB's version of these regulations will likely be released when that agency holds an Atlanta, Ga. mortgage issues hearing on Jan. 17. Pam Davis of Delta Community CU, Atlanta, Ga., and other credit union representatives from that state will join Georgia Credit Union League leaders at that hearing. Davis is set to speak on behalf of her credit union and CUNA during the hearing.
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