(a) Definitions. For purposes of this section:
(1) Certified or licensed appraiser means a person who is certified or licensed by the State agency
in the State in which the property that secures the transaction is
located, and who performs the appraisal in conformity with the Uniform
Standards of Professional Appraisal Practice and the requirements
applicable to appraisers in title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C.
3331 et seq.), and any implementing regulations, in effect
at the time the appraiser signs the appraiser’s certification.
(2) Consummation has the same meaning as in 12 CFR 1026.2(a)(13).
(3) Creditor has the same meaning
as in 12 CFR 1026.2(a)(17).
(4) Credit risk means the financial
risk that a consumer will default on a loan.
(5) Higher-priced mortgage loan has
the same meaning as in 12 CFR 1026.35(a)(1).
(6) Manufactured home has the same meaning as in 24 CFR 3280.2.
(7) Manufacturer’s invoice means
a document issued by a manufacturer and provided with a manufactured
home to a retail dealer that separately details the wholesale (base)
prices at the factory for specific models or series of manufactured
homes and itemized options (large appliances, built-in items and equipment),
plus actual itemized charges for freight from the factory to the dealer’s
lot or the homesite (including any rental of wheels and axles) and
for any sales taxes to be paid by the dealer. The invoice may recite
such prices and charges on an itemized basis or by stating an aggregate
price or charge, as appropriate, for each category.
(8) National Registry means the
database of information about State certified and licensed appraisers
maintained by the Appraisal Subcommittee of the Federal Financial
Institutions Examination Council.
(9) New manufactured home means
a manufactured home that has not been previously occupied.
(10) State agency means
a “State appraiser certifying and licensing agency” recognized in
accordance with section 1118(b) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347(b)) and any
implementing regulations.
(b) Exemptions. Unless otherwise specified,
the requirements in paragraphs (c) through (f) of this section do
not apply to the following types of transactions:
(1) A loan that satisfies the criteria
of a qualified mortgage as defined pursuant to 15 U.S.C. 1639c;
(2) An extension of credit
for which the amount of credit extended is equal to or less than the
applicable threshold amount, which is adjusted every year to reflect
increases in the Consumer Price Index for Urban Wage Earners and Clerical
Workers, as applicable, and published in the official staff commentary
to this paragraph (b)(2);
(3) A transaction secured by a mobile home, boat, or trailer.
(4) A transaction to
finance the initial construction of a dwelling.
(5) A loan with a maturity of 12 months
or less, if the purpose of the loan is a “bridge” loan connected with
the acquisition of a dwelling intended to become the consumer’s principal
dwelling.
(6) A reverse-mortgage
transaction subject to 12 CFR 1026.33(a).
(7) An extension of credit that is a refinancing
secured by a first lien, with refinancing defined as in 12 CFR 1026.20(a)
(except that the creditor need not be the original creditor or a holder
or servicer of the original obligation), provided that the refinancing
meets the following criteria:
(i) Either—
(A) The credit
risk of the refinancing is retained by the person that held the credit
risk of the existing obligation and there is no commitment, at consummation,
to transfer the credit risk to another person; or
(B) The refinancing is insured or guaranteed
by the same Federal government agency that insured or guaranteed the
existing obligation;
(ii) The regular periodic payments under
the refinance loan do not—
(A) Cause the principal balance to increase;
(B) Allow the consumer to
defer repayment of principal; or
(C) Result in a balloon payment, as defined
in 12 CFR 1026.18(s)(5)(i); and
(iii) The proceeds from the refinancing
are used only to satisfy the existing obligation and to pay amounts
attributed solely to the costs of the refinancing; and
(8) A transaction secured
by:
(i) A new manufactured home and land,
but the exemption shall only apply to the requirement in paragraph
(c)(1) of this section that the appraiser conduct a physical visit
of the interior of the new manufactured home; or
(ii) A manufactured home and not land,
for which the creditor obtains one of the following and provides a
copy to the consumer no later than three business days prior to consummation
of the transaction—
(A) For a new manufactured home, the
manufacturer’s invoice for the manufactured home securing the transaction,
provided that the date of manufacture is no earlier than 18 months
prior to the creditor’s receipt of the consumer’s application for
credit;
(B) A cost estimate
of the value of the manufactured home securing the transaction obtained
from an independent cost service provider; or
(C) A valuation, as defined in 12 CFR 1026.42(b)(3),
of the manufactured home performed by a person who has no direct or
indirect interest, financial or otherwise, in the property or transaction
for which the valuation is performed and has training in valuing manufactured
homes.
(c) Appraisals required.
(1) In general. Except as provided in paragraph (b) of this section, a creditor
shall not extend a higher-priced mortgage loan to a consumer without
obtaining, prior to consummation, a written appraisal of the property
to be mortgaged. The appraisal must be performed by a certified or
licensed appraiser who conducts a physical visit of the interior of
the property that will secure the transaction.
(2) Safe harbor. A creditor obtains a written appraisal that meets the requirements
for an appraisal required under paragraph (c)(1) of this section if
the creditor:
(i) Orders that the appraiser perform
the appraisal in conformity with the Uniform Standards of Professional
Appraisal Practice and title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and any implementing regulations in effect at the time
the appraiser signs the appraiser’s certification;
(ii) Verifies through the National Registry
that the appraiser who signed the appraiser’s certification was a
certified or licensed appraiser in the State in which the appraised
property is located as of the date the appraiser signed the appraiser’s
certification;
(iii)
Confirms that the elements set forth in appendix N to this part are
addressed in the written appraisal; and
(iv) Has no actual knowledge contrary
to the facts or certifications contained in the written appraisal.
(d) Additional appraisal for certain higher-priced mortgage loans.
(1) In general. Except as provided in paragraphs (b) and (d)(7)
of this section, a creditor shall not extend a higher-priced mortgage
loan to a consumer to finance the acquisition of the consumer’s principal
dwelling without obtaining, prior to consummation, two written appraisals,
if:
(i) The seller acquired the property
90 or fewer days prior to the date of the consumer’s agreement to
acquire the property and the price in the consumer’s agreement to
acquire the property exceeds the seller’s acquisition price by more
than 10 percent; or
(ii) The seller acquired the property 91 to 180 days prior to the
date of the consumer’s agreement to acquire the property and the price
in the consumer’s agreement to acquire the property exceeds the seller’s
acquisition price by more than 20 percent.
(2) Different certified or licensed appraisers. The two appraisals
required under paragraph (d)(1) of this section may not be performed
by the same certified or licensed appraiser.
(3) Relationship
to general appraisal requirements. If two appraisals must be
obtained under paragraph (d)(1) of this section, each appraisal shall
meet the requirements of paragraph (c)(1) of this section.
(4) Required analysis in the additional appraisal. One of the two
required appraisals must include an analysis of:
(i) The
difference between the price at which the seller acquired the property
and the price that the consumer is obligated to pay to acquire the
property, as specified in the consumer’s agreement to acquire the
property from the seller;
(ii) Changes in market conditions between
the date the seller acquired the property and the date of the consumer’s
agreement to acquire the property; and
(iii) Any improvements made to the property
between the date the seller acquired the property and the
date of the consumer’s agreement to acquire the property.
(5) No charge for the additional appraisal. If the creditor must obtain two appraisals under paragraph (d)(1)
of this section, the creditor may charge the consumer for only one
of the appraisals.
(6) Creditor’s determination of prior sale
date and price.
(i) Reasonable
diligence. A creditor must obtain two written appraisals under
paragraph (d)(1) of this section unless the creditor can demonstrate
by exercising reasonable diligence that the requirement to obtain
two appraisals does not apply. A creditor acts with reasonable diligence
if the creditor bases its determination on information contained in
written source documents, such as the documents listed in Appendix
O to this part.
(ii) Inability to determine prior sale date or price—modified
requirements for additional appraisal. If, after exercising reasonable
diligence, a creditor cannot determine whether the conditions in paragraphs
(d)(1)(i) and (d)(1)(ii) are present and therefore must obtain two
written appraisals in accordance with paragraphs (d)(1) through (5)
of this section, one of the two appraisals shall include an analysis
of the factors in paragraph (d)(4) of this section only to the extent
that the information necessary for the appraiser to perform the analysis
can be determined.
(7) Exemptions
from the additional appraisal requirement. The additional appraisal
required under paragraph (d)(1) of this section shall not apply to
extensions of credit that finance a consumer’s acquisition of property:
(i) From a local, State or Federal government agency;
(ii) From a person who
acquired title to the property through foreclosure, deed-in-lieu of
foreclosure, or other similar judicial or non-judicial procedure as
a result of the person’s exercise of rights as the holder of a defaulted
mortgage loan;
(iii)
From a non-profit entity as part of a local, State, or Federal government
program under which the non-profit entity is permitted to acquire
title to single-family properties for resale from a seller who acquired
title to the property through the process of foreclosure, deed-in-lieu
of foreclosure, or other similar judicial or non-judicial procedure;
(iv) From a person
who acquired title to the property by inheritance or pursuant to a
court order of dissolution of marriage, civil union, or domestic partnership,
or of partition of joint or marital assets to which the seller was
a party;
(v) From
an employer or relocation agency in connection with the relocation
of an employee;
(vi) From a servicemember, as defined in 50 U.S.C. App. 511(1), who
received a deployment or permanent change of station order after the
servicemember purchased the property;
(vii) Located in an area designated
by the President as a federal disaster area, if and for as long as
the Federal financial institutions regulatory agencies, as defined
in 12 U.S.C. 3350(6), waive the requirements in title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, as amended
(12 U.S.C. 3331 et seq.), and any implementing regulations
in that area; or
(viii) Located in a rural county, as defined in 12 CFR 1026.35(b)(2)(iv)(A).
(e) Required disclosure.
(1) In general. Except as provided in paragraph (b) of this section, a creditor
shall disclose the following statement, in writing, to a consumer
who applies for a higher-priced mortgage loan: “We may order an appraisal
to determine the property’s value and charge you for this appraisal.
We will give you a copy of any appraisal, even if your loan does not
close. You can pay for an additional appraisal for your own use at
your own cost.” Compliance with the disclosure requirement in Regulation
B, 12 CFR 1002.14(a)(2), satisfies the requirements of this paragraph.
(2) Timing of disclosure. The disclosure required
by paragraph (e)(1) of this section shall be delivered or placed in
the mail no later than the third business day after the creditor
receives the consumer’s application for a higher-priced mortgage loan
subject to this section. In the case of a loan that is not a higher-priced
mortgage loan subject to this section at the time of application,
but becomes a higher-priced mortgage loan subject to this section
after application, the disclosure shall be delivered or placed in
the mail not later than the third business day after the creditor
determines that the loan is a higher-priced mortgage loan subject
to this section.
(f) Copy of appraisals.
(1) In general. Except as provided in paragraph (b) of this section, a creditor
shall provide to the consumer a copy of any written appraisal performed
in connection with a higher-priced mortgage loan pursuant to paragraphs
(c) and (d) of this section.
(2) Timing. A creditor shall provide to the consumer a copy of each written
appraisal pursuant to paragraph (f)(1) of this section:
(i) No later
than three business days prior to consummation of the loan; or
(ii) In the case of
a loan that is not consummated, no later than 30 days after the creditor
determines that the loan will not be consummated.
(3) Form of copy. Any copy of a written appraisal required by paragraph
(f)(1) of this section may be provided to the applicant in electronic
form, subject to compliance with the consumer consent and other applicable
provisions of the Electronic Signatures in Global and National Commerce
Act (E-Sign Act) (15 U.S.C. 7001 et seq.).
(4) No charge
for copy of appraisal. A creditor shall not charge the consumer
for a copy of a written appraisal required to be provided to the consumer
pursuant to paragraph (f)(1) of this section.
(g) Relation to other rules. The rules in this section were adopted jointly by the Board, the
Office of the Comptroller of the Currency (OCC), the Federal Deposit
Insurance Corporation, the National Credit Union Administration, the
Federal Housing Finance Agency, and the Consumer Financial Protection
Bureau (Bureau). These rules are substantively identical to the OCC’s
and the Bureau’s higher-priced mortgage loan appraisal rules published
separately in 12 CFR part 34, subpart G and 12 CFR part 164, subpart
B (for the OCC) and 12 CFR 1026.35(a) and (c) (for the Bureau). The
Board’s rules apply to all creditors who are State member banks, bank
holding companies and their subsidiaries (other than a bank), savings
and loan holding companies and their subsidiaries (other than a savings
and loan association), and insured branches and agencies of foreign
banks. Compliance with the Board’s rules satisfies the requirements
of 15 U.S.C. 1639h.
