United States

Regulatory agencies issue final rule amending HPML Appraisal Rule


The Board of Governors of the Federal Reserve System, Bureau of Consumer Financial Protection, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration and the Office of the Comptroller of the Currency issued a supplemental final rule amending the appraisal rule for higher-priced mortgage loans (HPMLs). As a reminder, the HPML appraisal rule issued back in January 2013 requires lenders to obtain an appraisal, provide applicants with a notification regarding the use of the appraisals and provide applicants with a copy of the written appraisal(s) used for certain mortgage transactions with an annual percentage rate that exceeds the average prime offer rate by a specified percentage. This supplemental final rule provides the following additional exemptions to the HPML appraisal rule:

  • Extensions of credit of $25,000 or less, indexed every year for inflation.
  • A refinancing where the holder of the credit risk of the existing obligation remains the same on the refinancing and the following stipulations are met:
    • the periodic payments under the refinance loan must not result in negative amortization, cover only interest on the loan or result in a balloon payment.
    • the proceeds from the refinance loan are only used to pay off the existing obligation and to pay closing or settlement charges.
  • Transactions secured in whole or in part by a manufactured home. This exemption lasts for 18 months (July 18, 2015) at which time the following will apply as noted in the final rule:
    • Transactions secured by a new manufactured home and land will be exempt from the requirement that the appraisal includes a physical inspection of the interior of the property, but will be subject to all other HPML appraisal requirements.
    • Transactions secured by an existing (used) manufactured home and land will not be exempt from the rules.
    • Transactions secured solely by a manufactured home and not land will be exempt from the rules if the creditor gives the consumer one of three types of information about the home’s value: 1) the manufacturer’s invoice of the unit cost (for a transaction secured by a new manufactured home); 2) an independent cost service unit cost, and 3) a valuation conducted by an individual who has no financial interest in the property or credit transaction, and has training in valuing manufactured homes.

The effective date for this supplemental rule is Jan. 18, 2014 and the modified exemptions for loans secured by manufactured homes as noted directly above will be effective on July 18, 2015. View the supplemental final rule.