Dangerous Pending Bill in US Senate
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Appraisers, If you work in Rural Areas [that definition is referenced in (b)(1) below], your appraisal livelihood is threatened by this pending bill in Congress.
This bill, if signed into law, will allow lenders to bypass appraisals for any property with a ‘transaction value’ of $400,000 or less (this is moving the de minimus goal post) if the lender was unable to find an available appraiser to complete an appraisal “within a reasonable amount of time”… that time frame apparently as determined by a regulator agency with jurisdiction over the lender. The bill shows ‘exceptions’ to this as per other laws.
Appraisers working in rural areas who are affected by this bill should IMMEDIATELY start communicating with your state Senator. Plus, you should continue to monitor the bill process in Congress.
This is the link to the bill, which was introduced on 11/16/2017 by Senator Mike Crapo [R-ID].
A hearing was held on 1/30/2018 by the Committee on Banking, Housing, and Urban Affairs. The web site does not show what action was taken at this hearing, or the current status of the bill.
The text of the portion of the S. 2155 bill affecting EXEMPTIONS FROM APPRAISALS IN RURAL AREAS:
(I have added red type and underlines to key points – although the Yahoo forums won’t display this)
SEC. 103. Exemption from appraisals of real property located in rural areas.
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by adding at the end the following:
“SEC. 1127. Exemption from appraisals of real estate located in rural areas.
- “(a) Definition.—In this section, the term ‘mortgage originator’ has the meaning given the term in section 103 of the Truth in Lending Act (15 U.S.C. 1602).
- “(b) APPRAISAL NOT REQUIRED. — Except as provided in subsection (d), notwithstanding any other provision of law, an appraisal in connection with a federally related transaction involving real property or an interest in real property is not required if —
- “(1) the real property or interest in real property is located in a rural area, as described in section 1026.35(b)(2)(iv)(A) of title 12, Code of Federal Regulations;
- “(2) not later than 3 days after the date on which the Closing Disclosure Form, made in accordance with the final rule of the Bureau of Consumer Financial Protection entitled ‘Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)’ (78 Fed. Reg. 79730 (December 31, 2013)), relating to the federally related transaction is given to the consumer, the mortgage originator or its agent, directly or indirectly —
- “(A) has contacted not fewer than 3 State certified appraisers or State licensed appraisers, as applicable; and
- “(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within a reasonable amount of time, as determined by the Federal financial institutions regulatory agency with oversight of the mortgage originator, to perform the appraisal in connection with the federally related transaction;
- “(3) the
balance of the loantransaction value is less than $400,000; and
- “(4) the mortgage originator is subject to oversight by a Federal financial institutions regulatory agency.
- “(c) Sale, assignment, or transfer. — A mortgage originator that makes a loan without an appraisal under the terms of subsection (b) shall not sell, assign, or otherwise transfer legal title to the loan unless —
- “(1) the loan is sold, assigned, or otherwise transferred to another person by reason of the bankruptcy or failure of the mortgage originator;
- “(2) the loan is sold, assigned, or otherwise transferred to another person regulated by a Federal financial institutions regulatory agency, so long as the loan is retained in portfolio by the person; or
- “(3) the sale, assignment, or transfer is pursuant to a merger of the mortgage originator with another person or the acquisition of the mortgage originator by another person or of another person by the mortgage originator.; or
- “(4) the sale, loan, or transfer is to a wholly owned subsidiary of the mortgage originator, provided that, after the sale, assignment, or transfer, the loan is considered to be an asset of the mortgage originator for regulatory accounting purposes.
- “(d) Exception. — Subsection (b) shall not apply if —
- “(1) a Federal financial institutions regulatory agency requires an appraisal under section 225.63(c), 323.3(c), 34.43(c), or 722.3(e) of title 12, Code of Federal Regulations; or
- “(2) the loan is a high-cost mortgage, as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602).
- “(e) Anti-Evasion.—Each Federal financial institutions regulatory agency shall ensure that any mortgage originator that the Federal financial institutions regulatory agency oversees that makes a significant amount of loans under subsection (b) is complying with the requirements of subsection (b)(2) with respect to each loan.”.