Jan. 22, 2013 – Two final rules dealing with appraisals were released Friday – one from the CFPB that requires lenders to provide home loan applicants free copies of written appraisals, and another from an interagency group that sets new requirements for lenders that issue higher-risk mortgage loans.
The CFPB’s final rule under Regulation B, which implements the Equal Credit Opportunity Act, implements several changes to the appraisal process. Notably, the rule eliminates credit unions’ current exemption from ECOA rules. The exemption was put in place because credit unions already have similar requirements under NCUA regulations.
Specifically, the final Reg B rule requires creditors to notify applicants in writing, within three business days of application, of the right to receive a copy of the appraisal or valuation. While creditors would still be permitted to charge reasonable fees associated with conducting appraisals and home value estimates, the final rule prohibits charging consumer fees for obtaining the reports. Throughout the rulemaking process, NAFCU repeatedly expressed concerns about the rule, noting that revising the real estate appraisal process would be too costly for credit unions and confuse consumers.
The interagency final rule on higher-priced appraisals, issued jointly by the CFPB, NCUA, Federal Reserve Board, FDIC, Federal Housing Finance Agency and Office of the Comptroller of the Currency, requires creditors that issue higher-risk mortgage loans to obtain written appraisals conducted by a certified or licensed appraiser based on a physical inspection of the interior of the property in question. The final rule adopts the term "higher-priced" for these situations to help align the rule with the existing "higher-priced" mortgage loan requirements (including escrows).
NAFCU had discouraged the agencies from issuing the rule. The association continues to point out that credit unions are having to contend with a myriad of other mortgage-related rules, and that, individually and cumulatively, they may make it harder for credit unions to issue mortgage loans.
Both final rules go into effect Jan. 18, 2014.
The association will work to improve both final rules and will continue its efforts to mitigate as much regulatory burden for credit unions as possible.