ALEXANDRIA, Va. Credit unions offering higher-risk mortgages, those with above-average interest rates, will need to get written reports by certified appraisers who physically inspect the inside and outside of homes, under new rules being issued by NCUA and the banking regulators.
The two-person NCUA Board approved the rule by so-called- notation—absent a public meeting—Friday.
In addition to the initial physical inspection, the rule will require a second appraisal when a home is being turned around for a quick, higher resale. The second appraisal will not be required if the new sale price is only slightly higher.
The rule will also require credit unions to provide borrowers with a notification regarding the use of the appraisals, and give borrowers a copy of the written appraisals used.
The rule, required under the Dodd-Frank Act, will use the Truth in Lending Act, or Reg Z, definition of a “higher-priced mortgage loan”.
The rule will not go into effect until January 2014.
The rule is also being issued by the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency, Federal Housing Finance Agency and Consumer Financial Protection Bureau.