Regulators Add Exemptions to Appraisal Rule

Federal regulators on Thursday issued a final rule that exempts some mortgage loans and refinances from appraisal requirements established under the Dodd-Frank Act.

The original appraisal requirements apply to higher-priced mortgages — defined as loans backed by consumers' homes that have interest rates above a certain threshold. Before making high-risk loans, creditors are obliged to hire appraisers to assess the value of real estate based on physical visits inside borrowers' homes.

The final rule exempts loans of less than $25,000 from the appraisal requirements, along with certain kinds of refinance loans.

"The exemptions are intended to save borrowers time and money while still ensuring that the loans are financially sound," said a joint press release from the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Federal Housing Finance Agency, the National Credit Union Administration and the Office of the Comptroller of the Currency.

The final rule also provides an 18-month exemption for loans secured by mobile homes.

"To ensure that access to affordable housing options is not hindered while creditors make the necessary adjustments, the requirements for manufactured home loans will not become effective" until July 2015, the press release said.

The final rule goes into effect Jan. 18.

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