The Consumer Financial Protection Agency issued a final rule on Friday that establishes new appraisal requirements for higher priced mortgage loans.
For higher priced loans, creditors must use a licensed or certified appraiser and requires they disclose information about the purpose of the appraisal and provide a free copy of the report to consumers.
“If the seller acquired the property for a lower price during the prior six months and the price difference exceeds certain thresholds, creditors will have to obtain a second appraisal at no cost to the consumer,” said the CFPB in a statement. “This requirement for higher-priced home-purchase mortgage loans is intended to address fraudulent property flipping by seeking to ensure that the value of the property legitimately increased.”
The rule exempts several types of loans, such as qualified mortgages as well as all reverse mortgages.
The rule is being issued by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency.
The rule will become effective on January 18, 2014.
View a summary of the rule here.