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Washington
NCUA, Agencies Propose Mortgage Appraisal Exemption
WASHINGTON (7/11/13)--Loans of $25,000 or less, certain "streamlined" refinancings, and certain loans secured by manufactured housing would be exempted from Dodd-Frank Act appraisal requirements for higher-priced mortgage loans under a proposed rule released by the National Credit Union Administration and fellow regulators on Wednesday.

"The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors," the NCUA, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint release.

Comments on the proposal will be accepted until Sept. 9. However, the agencies said comments regarding a related Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register.

Under the terms of the higher-priced mortgage loan regulations, mortgage lenders will have 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 must 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.

For more on the joint agency proposed rule, use the resource link.
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