On December 12, 2013, The Federal Reserve Board, along with five other federal regulatory agencies, issued a final rule to exempt a subset of higher priced mortgage loans (HPML) from certain appraisal requirements. Higher priced mortgage loans are loans secured by a borrower’s home and bearing interest rates higher than the average prime offer rate (APOR) for comparable properties and mortgages. New exemptions include: loans of $25,000 or less and certain “streamlined” refinancings, loans secured by a new manufactured home and land and loans secured by manufactured homes without land. Loans secured by a new manufactured home and land will be exempt only from the requirement that an appraiser visit the home’s interior.
Other loans exempted from HPML appraisal requirements include qualified mortgages, reverse mortgages, loans secured by new manufactured homes and by mobile homes, boats or trailers, new construction loans and bridge loans.
All other HPML loans will now require creditors to use a licensed or certified appraiser who prepares a complete report on physical inspection of the property. Applicants for a loan must be furnished a free copy of any appraisal. These changes go into effect on January 18, 2014.