WASHINGTON (AP) — Federal regulators are proposing new requirements for property appraisals used to underwrite some higher-risk mortgage loans.
Agencies including the Federal Reserve and the Consumer Financial Protection Bureau said Wednesday that all appraisals on risky mortgages should be prepared by a licensed or certified appraiser and include a written inspection of the home's interior. Consumers would receive more information, including a free copy of the appraisal.
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 falsely inflated appraisals.
The rules apply to higher-risk mortgage loans — those on people's homes whose interest rates are above a variable threshold.
The rule is open for public comment until Oct. 15.