The Federal Reserve Board has joined with five other federal regulatory agencies in proposing a new rule to impose appraisal requirements for loans secured by a borrower’s home and bearing interest rates higher than the average prime offer rate (APOR) for comparable properties and mortgages.
Higher-risk loans will now require creditors to use a licensed or certified appraiser who prepares a complete report on physical inspection of the property. Applicants for a loan must be furnished a free copy of any appraisal. In an effort to prevent fraudulent property flipping the rule would require creditors to obtain a second appraisal at no cost to applicant if the property has been acquired at a lower price in the previous six months.
NAR is looking at the proposed rule for issues of concern and intends to file a formal comment on the proposed rule.