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MCUA Supports Proposed Exemptions from Appraisal Requirements for HPMLs

On Monday, Sept. 9, 2013, the Missouri Credit Union Association (MCUA) filed a comment letter on a joint proposal that would provide additional exemptions from the appraisal requirements for “Higher-Priced Mortgage Loans” (HPMLs) under Regulation Z. The proposal, which was issued by the CFPB, NCUA, and other federal financial regulators, would exempt certain transactions from the appraisal requirements for HPMLs, as set forth in the joint final rule adopted in January of this year. The final rule lays out certain appraisal requirements for loans that qualify as HPMLs, which the rule defines as a closed-end loan secured by the consumer’s principal dwelling where the APR exceeds the average prime offer rate by:

  • 1.5 percentage points for a first-lien non-jumbo loan;
  • 2.5 percentage points for a first-lien jumbo loan; or
  • 3.5 percentage points for a junior-lien loan.

The final rule exempts certain transactions from the appraisal requirements, such as QMs and reverse mortgages.

The proposal would provide additional exemptions from the HPML appraisal requirements, including:

  1. Transactions secured by existing manufactured homes excluding land;
  2. Certain “streamlined” refinancings; and
  3. Transactions of $25,000 or less.

MCUA generally supports each of the proposed exemptions. However, several suggestions will be offered to the agencies to make the exemptions more effective, such as by increasing the $25,000 threshold to $50,000. In addition, MCUA urges more time for compliance with the entire rule, of up to six months, to facilitate the efforts of covered credit unions to implement changes required under the rule. 


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