WASHINGTON – New federal rules proposed Wednesday would require all high-risk mortgage lenders to obtain property appraisals for the first time.
Under the rule, all mortgages deemed risky would require an appraisal by a licensed or certified appraiser, including a written inspection of the home’s interior, according to regulators including the Federal Reserve and the Consumer Financial Protection Bureau. Previously, there was no universal federal requirement that appraisals be performed on all risky mortgages.
Consumers would receive more information, including a free copy of the appraisal, the agencies said.
A second appraisal would be required if the seller bought the home at a lower price in the previous six months. The provision is meant to prevent fraudulent flipping of properties using inflated appraisals.
The rules would apply to higher-risk mortgage loans – those on people’s homes whose interest rates are above a variable threshold.