- Defines a higher-risk mortgage loan as a residential mortgage loan secured by a principal dwelling with an annual percentage rate that exceeds an average prime offer rate by certain specified percentages.
- Requires a lender to take certain actions before originating a higher-risk mortgage loan, including:
- obtaining a written appraisal by a certified or licensed appraiser who has physically visited the interior of the mortgaged property;
- obtaining a second appraisal from a different appraiser that analyzes any difference in sales prices, changes in market conditions, and any improvements made to the property if the collateral was acquired by the seller within 180 days of the current transaction and the property is being sold at a higher price than the seller paid;
- providing the borrower with a statement that any appraisal is for the creditor's sole use, and that the borrower may choose to have a separate appraisal conducted at the applicant's expense; and
- providing the borrower with a copy of the appraisal without charge at least three days before closing.
- Requires a creditor to use reasonable diligence to determine if a second appraisal must be performed.
- Proposes a safe harbor of steps the lender should take to confirm appraisals are conducted according to regulatory and statutory requirements.
- Requests comment by October 15, 2012, on all aspects of the rule, including possible exemptions to the appraisal and second appraisal requirements, and whether the annual percentage rate should be replaced by a "transaction coverage rate" for purposes of determining if a loan is a higher-risk mortgage loan.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Compliance Officer
Chief Risk Officer
12 CFR Part 1026
Section 129H of the Truth in Lending Act (15 U.S.C. § 1639h)
Joint Notice of Proposed Rulemaking: Appraisal Requirements for Higher-Risk Mortgages
Beverlea S. Gardner, Senior Examination Specialist, at (202) 898-3640 or Bgardner@fdic.gov
Glenn S. Gimble, Senior Policy Analyst, at (202) 898-6865 or GGimble@fdic.gov
Mark Mellon, Counsel, at (202) 898-3884 or MMellon@fdic.gov
Kimberly Stock, Counsel, at (202) 898-3815 or KStock@fdic.gov
Sandra S. Barker, Counsel, at (202) 898-3615 or SaBarker@fdic.gov
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2012/index.html.
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).