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Subject: Appraisals for Higher-Risk Mortgage Loans
Date: October 15, 2012
To: Chief Executive Officers of National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Notice of Proposed Rulemaking
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the National Credit Union Administration issued a joint notice of proposed rulemaking on August 15, 2012. The proposal would implement new appraisal requirements for higher-risk mortgage loans under the Truth in Lending Act. These requirements were imposed by the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010.1
The proposal implements new Truth in Lending Act requirements, which prohibit a creditor from extending credit in the form of a higher-risk mortgage loan to any consumer without first
A higher-risk mortgage loan is a residential mortgage loan secured by a consumer’s principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate for the mortgage is set
Several exclusions from the definition of “higher-risk mortgage” are explained in the proposed rule. The proposed rule would implement the requirements of the statute. It would apply to national banks, federal savings associations, and their respective subsidiaries that originate higher-risk mortgage loans. The notice of the proposed rule was published in the Federal Register on September 5, 2012, at 77 Fed. Reg. 54722. Comments are due by October 15, 2012.
Contact Robert L. Parson, Appraisal Policy Specialist, (202) 874-5411; Carolyn B. Engelhardt, Bank Examiner (Risk Specialist–Credit), (202) 874-4917; Charlotte M. Bahin, Senior Counsel, or Mitchell Plave, Special Counsel, Legislative & Regulatory Activities Division, (202) 874-5090; or Krista LaBelle, Counsel, Community and Consumer Law, (202) 874-5750.
Daniel P. Stipano