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Agencies issue proposed rule for higher-risk mortgages

Six federal financial regulatory agencies issued a proposed rule on Aug. 15 to establish new appraisal requirements for “higher-risk mortgage loans.”

The proposed rule would implement amendments to the Truth in Lending Act enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the Dodd-Frank Act, mortgage loans are higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.

For higher-risk mortgage loans, among other things, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property.

The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days, or until Oct. 15, 2012, to review and comment on most of the proposal. However, comments related to the proposed Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register. Publication of the proposal in the Federal Register is expected shortly.

Click here to read the entire release from the federal agencies.

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