WASHINGTON – Six federal financial regulators – including NCUA – have issued a proposed rule creating new appraisal requirements for “higher-risk mortgage loans.”

In a joint statement, the regulators said the proposed rule would implement amendments to the Truth in Lending Act enacted by the Dodd-Frank Act, which defines “higher-risk mortgages” as those that are secured by a consumer’s home and have interest rates above a certain threshold.

The proposed rule is being issued by the Federal Reserve Board of Governors, the Consumer Financial Protection Bureau, FDIC, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency and NCUA.

Among the proposed provisions:
* Creditors would be required to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property.
* Creditors would be required 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. Regulators said this is aimed at addressing fraudulent property flipping by making sure that the value of the property being used as collateral for the loan legitimately increased.

Comments are due Oct. 15.


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