(Cost Per Origination)/(Median Revenues Per Loan). The date on which the consumer and the seller signed the agreement might not be the date on which the consumer became contractually obligated under State law to acquire the property. See also comments XX(b)(3)(vi)(A)-1 and -2 and comment (b)(3)(vi)(B)-1. The Agencies understand that loans secured solely by a residential structure, such as a manufactured home, typically more closely resemble titled vehicle loans. The term “consummation” is defined in § 1026.2(a)(13) as the time that a consumer becomes contractually obligated on a credit transaction. NASD Rule 1110 has been superseded by FINRA Rule 1200 Series. Register, and does not replace the official print version or the official Additionally, TILA section 129H requires that appraisals be performed by a “certified or licensed appraiser.” TILA section 129H(b)(1), 15 U.S.C. on Rural is defined as a loan made outside of a micropolitan or metropolitan statistical area. This may make requiring appraisals with interior property visits extremely expensive relative to the cost of the manufactured home. for better understanding how a document is structured but important initiatives, and more. FHFA: You may submit your comments, identified by regulatory information number (RIN) 2590-AA58, by any of the following methods: Copies of all comments will be posted without change, including any personal information you provide, such as your name, address, and phone number, on the FHFA Internet Web site at http://www.fhfa.gov. from inappropriate influence and coercion pursuant to the appraisal Includes a certification signed by the appraiser that the appraisal was prepared in accordance with the requirements of FIRREA title XI, as amended, and any implementing regulations. (accessed June 11, 2012). These rules are substantively identical to the Board's and the OCC's higher-risk mortgage appraisal rules published separately in 12 CFR 226.43 (for the Board), 12 CFR part 34, subpart G and 12 CFR 164.20 through 34.21 (for the OCC). activities of an appraisal management company; (2)  monitor the requirements established by the Federal However, given that the definitions of the two terms differ in significant ways, the Agencies are proposing, consistent with the statute, to define and use the term “higher-risk mortgage loan” when establishing the scope of proposed § 1026.XX. The Agencies believe, however, that requiring an additional appraisal where creditors are unable to obtain the seller's acquisition price and date is necessary to prevent circumvention of the statute. Accordingly, proposed § 1026.XX(b)(3)(i)(A) refers to the date on which the seller “acquired” the property. The Board's rules apply to all creditors who are State member banks, bank holding companies and their subsidiaries (other than a bank), savings and loan holding companies and their subsidiaries (other than a savings and loan association), and uninsured state branches and agencies of foreign banks. accordance with this title or operates as a subsidiary of a federally The convention of using full-interior appraisals on first-liens may have developed to improve underwriting quality, and the implementation of this proposed rule would assure that the practice would continue under different market conditions. supervision of appraisal management companies if it makes a written 1. underwriters, accountants, and providers of legal services, in all The definition of higher-risk mortgage loan expressly excludes qualified mortgages, as defined in TILA section 129C, as well as reverse mortgage loans that are qualified mortgages as defined in TILA section 129C. The proposed revisions to Regulation Z would implement a new TILA provision requiring appraisals for “higher-risk mortgages” that was added to TILA as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (Pub. 80. As such, this disclosure should not impose additional costs on creditors. One possible alternative metric discussed in those proposals is the “transaction coverage rate” (TCR), which would exclude all prepaid finance charges not retained by the creditor, a mortgage broker, or an affiliate of either. Question 41: The Agencies request comment on the proposed approach to situations in which the creditor cannot obtain the necessary information and whether the rule should address information gaps about the flipping transaction in other ways. XX(b)(3)(iv) Requirements for the additional appraisal. Proposed § 1026.XX(a)(1) uses the term “Uniform Standards of Professional Appraisal Practice.” Proposed comment XX(a)(1)-1 clarifies that USPAP refers to the professional appraisal standards established by the Appraisal Standards Board of the “Appraisal Foundation,” as defined in FIRREA section 1121(9). (5)  the Federal National Mortgage Association. (2)  EXTENSION OF EFFECTIVE DATE.--Subject to the No. preceding year. However, the statute is silent as to the extent of creditors' obligations under the statute to evaluate appraisers' compliance. Under the Additional Written Appraisal requirement, if a loan is classified as a higher-risk mortgage loan that will finance the acquisition of the property to be mortgaged, and that property was acquired within the previous 180 days by the seller at a price that was lower than the current sale price, then the creditor would be required to obtain an additional written appraisal containing additional analyses. It is the opinion of the FDIC that the proposed rule will not have a significant economic impact on a substantial number of small entities that it regulates in light of the fact that: (1) Part 323 already requires FDIC-supervised depository institutions to obtain some type of valuation for real estate-related financial transactions; (2) the requirement of conducting a physical visit of the interior of the mortgaged property creates a potential burden for an appraiser, rather than the lender, with the cost being born by the applicant; and (3) the second appraisal requirement should affect a nominal amount of transactions. In this case, the creditor would not be able to determine whether the price at which the seller acquired the property was lower than the price the consumer is obligated to pay under the consumer's acquisition agreement, pursuant to § 34.203(b)(3)(i)(B). providing for equal employment opportunity in the Federal Government, on Question 13: For these reasons, the Agencies request comment on whether to exclude bridge loans from the definition of higher-risk mortgage loan. Question 15: The Agencies request comment on the appropriateness of the safe harbor, the list of requirements a creditor must satisfy to receive the safe harbor under § 1026.XX(b)(2) and appendix N, and whether the proposed safe harbor should be included in the rule. The APOR is not a market wide average of the APR but, instead, is derived from average interest rates, points, and other loan pricing terms such as margins and indices. 64. 49. (3)  RIGHTS OF ACCESS, EXAMINATION, AND COPYING. USPAP. The costs of the proposed rule, which are predominantly related to compliance, are more readily quantifiable than the benefits and can be calculated based on the mix of loans originated by an entity and the number of employees at that entity. The creditor is prohibited from charging the consumer for any copy of an appraisal required to be provided under § 226.43(d)(1), including by imposing a fee specifically for a required copy of an appraisal or by marking up the interest rate or any other fees payable by the consumer in connection with the higher-risk mortgage loan. and certifications, sanctions, disciplinary actions, license and or licensing agency of the State certifying or licensing such appraiser This is the other alternative on which the Bureau seeks comment in the 2012 HOEPA Proposal. 3339), that relate to an appraiser's development and reporting of the appraisal in effect at the time the appraiser signs the appraiser's certification. Existing State and Federal law and regulations require the use of a certified appraiser rather than a licensed appraiser for certain types of transactions. Also, as discussed above, the Agencies have proposed to use the single term “acquisition” because this term is generally understood to include acquisition of legal title to the property, including by purchase. 516), effective August 9, 1989; as section 1473(b) and (f)(1) of title XIV of the Act of July 21, 2010 The Appraisal Subcommittee shall 12 U.S.C. However, as noted above with respect to non-purchase acquisitions by the seller, the Agencies acknowledge that the term “acquisition” may be over-inclusive in describing the consumer's transaction, because non-purchase acquisitions by the consumer do not readily appear to trigger the additional appraisal requirement. (3)  JUDICIAL REVIEW.--A decision of the subcommittee [Source:  Section 1121 of title XI of the Act of August 9, As part of its broader testing of integrated mortgage disclosures, the Bureau tested versions of the new appraisal-related disclosures required by both TILA and ECOA. The following table summarizes these burdens. See 2012 HOEPA Proposal, pp. on FederalRegister.gov The definition of higher-risk mortgage expressly excludes qualified mortgages, as defined in TILA section 129C, as well as reverse mortgage loans that are qualified mortgages as defined in TILA section 129C. 102-33; 105 Stat. financing information and data that is available to real estate than 15 certified or licensed appraisers in a State or 25 or more Insurance Corporation, the National Credit Union Administration Board, has in place a policy of issuing a reciprocal certification or license Lack of information and conflicting information—requirements for the additional appraisal. Eliminating the ability to use lower cost valuation methods, and thereby eliminating price competition on this component of the transaction, may benefit firms that prefer to employ more thorough valuation methods. [62] creditors and underwriters, collecting fees from creditors and 2191), effective July 21, As noted above, revenue information is not available for all IMBs so two proxies for revenue are employed: (1) 3% of origination dollar volume, and (2) the median revenue per origination for MCR reporters that report revenue. In addition, higher-risk mortgage creditors would have to provide the applicant with a copy of each appraisal conducted at least three days prior to closing and develop systems for that purpose. In addition, the sales price solely for a manufactured home, but not the land to which it is attached, is typically lower than the cost of both a manufactured home and the land to which it is attached. A creditor shall disclose the following statement, in writing, to a consumer who applies for a higher-risk mortgage loan: “We may order an appraisal to determine the property's value and charge you for this appraisal. 1. the Chairperson of the Appraisal Subcommittee selected by the Council. For a discussion of these regulatory exemptions, see Interagency Appraisal and Evaluation Guidelines, 75 FR 77450, 77465-68 (Dec. 10, 2010). 1123. documents in the last year, 23 1639h(b)(2)(A). Originations drawn from HMDA 2010 for HMDA reporters and imputed for HMDA non-reporters using call report information. [5] Executive Secretary. the performance of real estate appraisals in connection with federally 75. connection with a real estate related financial transaction defined in 15 U.S.C. Again, the Agencies do not currently have sufficient data to model the impact of the more inclusive finance charge on coverage of the higher-risk mortgage loan requirements. However, the impact on access to credit is probably negligible. (D)  to review and verify the work of appraisers. (a)  IN GENERAL.--For purposes of this title, the Secretary This subpart is issued by the Office of the Comptroller of the Currency under 12 U.S.C. Borrowers are guaranteed that they will be able to access their authorized loan funds in the future (subject to the terms of the loan), even if the loan balance exceeds the value of the home or if the lender experiences financial difficulty. Rate set. Because of the small number of transactions affected, the Board believes the proposed rule is unlikely to have a significant economic impact on a substantial number of small entities. Principal dwelling. sharing sensitive information, make sure you’re on a federal The number of these small entities that would make higher-risk mortgage loans in the future is unknown. (5)  MAINTENANCE OF CONFIDENTIAL RECORDS--. annually, a roster listing individuals who have received a State The proposed comment also explains that the creditor would be prohibited from charging the consumer for the “performance of one of the two appraisals required under § 1026.XX(b)(3)(i).” This comment is intended to clarify that the prohibition on charging the consumer under § 1026.XX(b)(3)(v) applies to charges for the cost of performing the appraisal, not the cost of providing the consumer with a copy of the appraisal. If the Bureau adopts both the more inclusive finance charge and the TCR adjustment in a final rule pursuant to the 2012 HOEPA Proposal and escrow rule, adopting the TCR adjustment in the higher-risk mortgage rule could ensure consistency across rules. (e)  REPORTING.--The Board of Governors of the Federal ), and any implementing regulations, in effect at the time the appraiser signs the appraiser's certification; (iii) Confirms that the elements set forth in appendix N to this part are addressed in the written appraisal; and. Decisions For example, according to HMDA data, less than four percent of first-lien mortgage loans in 2010 or 2011 would be classified as “higher-risk” and thus subject to any appraisal requirement. for an individual from another State when--, (1)  the appraiser licensing and certification program of such 73. 1639h. The Bureau requests comment on the analysis above and requests any relevant data. Question 43: The Agencies request comment on whether providing the notification at some other time would be more beneficial to consumers, and how the notification should be provided when an application is submitted by telephone, facsimile or electronically. 15 U.S.C. “Desk Officer for the Bureau of Consumer Financial Protection”): by mail to U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503, or by the internet to http://oira_submission@omb.eop.gov, with copies to the Agencies at the addresses listed in the ADDRESSES section of this Supplementary Information. 1989]. Please consult the appropriate FINRA Rule. 101-127, 725-28, 905-11 (published July 9, 2012), available at http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_integrated-mortgage-disclosures.pdf. Proposed § 1026.XX(a)(2)(ii)(B) would exclude reverse mortgage transactions as defined in § 1026.33(a) from the definition of “higher-risk mortgage loan.” TILA section 129H(b)(4)(B) authorizes the Agencies to jointly exempt, by rule, a class of loans from the requirements of TILA sections 129H(a) or 129H(b) if the Agencies determine that the exemption is in the public interest and promotes the safety and soundness of creditors. If such an analysis is not possible without information about when the seller acquired the property, the Agencies invite comment on whether the rule should assume the seller acquired the property 180 days prior to the date of the consumer's agreement to acquire the property. the Appraisal Foundation, to help defray those costs of the foundation XX(b) Appraisals required for higher-risk mortgage loans. property and provides a varying level of detail about the property's [89] (1)  to maintain a registry of individuals who are qualified Similarly, the costs imposed on creditors are sufficiently small that they are unlikely to result in a decrease in the supply of credit. Table 1—Ownership and Mortgage Characteristics of Rural and Non-Rural Households, ACS 2010. appraisers and appraisal management companies to the National appraisal appraisal management company meets the required qualification criteria In general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. The definition of “higher-risk mortgage” expressly excludes qualified mortgages, as defined in TILA section 129C, as well as reverse mortgage loans that are qualified mortgages as defined in TILA section 129C. An appraisal that was previously obtained in connection with the seller's acquisition or the financing of the seller's acquisition of the property does not satisfy the requirements of § 226.43(b)(3). This information will be used by creditors to evaluate real estate collateral in higher-risk mortgage loan transactions and by consumers entering these transactions. The same procedures and limitations as are provided with respect CERTIFICATION AND LICENSING REQUIREMENTS. Relevant information about this document from Regulations.gov provides additional context. Subcommittee, if necessary to carry out the Subcommittee's functions [132], Bureau: Insured depository institutions with more than $10 billion in assets, their depository institution affiliates, and certain non-depository mortgage institutions.[133]. 34.203(a)(1) Certified or licensed appraiser. registered with a State appraiser certifying and licensing agency in SR-NASD-2003-24 removed Rule 1113 eff. The Board proposes to codify its higher-risk mortgage appraisal rules at 12 CFR 226.XX et seq. This subpart cross-references the requirement that creditors extending credit in the form of higher-risk mortgage loans comply with Section 129H of the Truth-in-Lending Act (TILA), 15 U.S.C. The Agencies have not interpreted the date of the consumer's acquisition to refer to the actual date of title transfer to the consumer under State law, or the date of consummation of the higher-risk mortgage loan, because it would be difficult if not impossible for creditors to determine, at the time that they must order an appraisal or appraisals to comply with § 1026.XX, when title transfer or consummation will occur. The Board reviewed the proposed rule under the authority delegated to the Board by OMB.

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