The CFPB, Federal Reserve Board, FDIC, FHFA, NCUA, and OCC published in the Federal Register on August 8, 2013 proposed rules creating several exemptions to the appraisal requirements for higher-priced mortgage loans. Most notably, the proposed rule creates an exemption for certain refinances with characteristics common to “streamlined” refinances. To be exempt from the appraisal rules, the owner or guarantor of the refinance loan must be the current owner or guarantor of the existing obligation, and the regular periodic payments under the new loan cannot cause a principal balance increase, permit the consumer to defer repayment, or result in a balloon payment. In addition, the proceeds from the refinance must be used solely to pay off the outstanding balance on the existing debt and for closing or settlement charges.
The proposed rule also creates exemptions for: (i) transactions secured solely by an existing or used manufactured home (in addition to the exemption for transactions secured by new manufactured homes); and (ii) extensions of credit in the amount of $25,000 or less, indexed annually for inflation.
Comments on the proposals are due by September 9.