Agencies Amend HPML Appraisal Rules
by: Margaret Wright
On December 12, 2013 the Agencies issued the final rule to amend the upcoming HPML Appraisal Rule which is effective on January 18, 2014. The final rule in part amends the transactions exempted under the rule by adding additional exemptions based on loan amount, certain refinance transactions and amends the current manufactured home exemption in addition to other clarifications and added definitions.
Manufactured Home Exemption
In the previous version of the HPML Appraisal Rule transactions secured by a manufactured home were exempt from the appraisal requirements. The amendment now revises the exemption to transactions secured in whole or in part by a manufactured home and adds additional requirements to be effective July 18, 2015.
Effective July 18, 2015 the manufactured home exemption will apply to new manufactured homes and land solely as to the requirement that the appraiser conduct a physical visit of the interior. A new manufactured home is defined as a manufactured home that has not been previously occupied.
As of July 18, 2015 the exemption will apply for a manufactured home and not land where:
- The creditor obtains the manufacturer’s invoice and the date of manufacture is not earlier than 18 months prior to application for a new manufactured home;
- An independent cost service provider’s cost estimate of the value of the manufactured home; or
- A valuation performed by a person who has no direct interest and has had manufactured home valuation training.
Threshold Amount Exemption
The HPML Appraisal Rule amendment includes the addition of an exemption for transactions based on the loan amount. The exemption will apply to a loan for which the amount is equal to or less than applicable threshold amount as adjusted every year to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as applicable.
From January 18, 2014 through December 31, 2014 the threshold amount as determined by the Index is $25,000 or less.
Refinance Transaction Exemption
The HPML Appraisal Rule amendment exempts certain refinance transactions secured by a first lien under the following circumstances:
- Where the credit risk is retained by the same entity that held the credit risk of the existing obligation or the refinancing is insured or guaranteed by the same Federal government agency as the existing obligation;
- The new loan’s payments will not cause the principal balance to increase, allow repayment of principal to be deferred or result in a balloon payment; and
- The proceeds from the refinance are used solely to satisfy the existing obligation and costs of the refinancing.
View the Amendments:
http://www.fdic.gov/news/news/press/2013/pr13116a.pdf
View the previous Compliance Monitor article concerning the HPML Appraisal Rule:
http://bankersadvisory.blogspot.com/2013/03/cfpb-and-agencies-issue-final-rule-on_4.html
About the Author
Margaret Wright, J.D., is VP and Manager of Regulatory Compliance at Bankers Advisory, Inc. She is a graduate of Stonehill College and earned her Juris Doctor at Suffolk University Law School. She serves on the Compliance Committee of the Massachusetts Mortgage Bankers Association and is admitted to the Massachusetts Bar. She can be reached at Margaret@bankersadvisory.com
Margaret Wright, JD, is regulatory compliance director with CLA. She is a graduate of Stonehill College and earned her juris doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar.
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