Subtitle F: Appraisal Activities
Property Appraisal Requirements
Requires physical appraisal for higher-risk mortgage by certified appraiser that performs work in accordance with Uniform Standards of Professional Appraisal Practice (USPAP). Also, requires second appraisal if property was previously purchased within 180 days of subject purchase. Additionally, requires creditors to provide to consumer one copy of each appraisal conducted for higher-risk mortgage, at least three days prior to closing, without charge. Higher-risk mortgage means any first lien residential mortgage loan with an APR that exceeds APOR for a comparable transaction by 1.5 percentage points or more for mortgage loan having original principal obligation that does not exceed conforming loan limit, 2.5 percentage points or more for jumbo loan having a principal obligation that is greater than conforming loan limit, and 3.5 percentage points or more for subordinate lien residential mortgage loan. Rules are to be promulgated by FRB, OCC, FDIC, NCUA, FHFA and CFPB.
Appraisal Independence Requirements
Prohibits any act or practice of extending credit or in providing services for consumer credit transaction that violates appraiser independence including compensating, coercing, extorting, colluding, instructing, inducing, bribing or intimidating appraiser for purpose of causing appraised value assigned to property to be based on any factor other than independent judgment of appraiser but allows person with interest in real estate transaction to ask appraiser to consider additional information, provide further detail or correct errors. Requires lenders, brokers, AMCs and others involved in real estate transaction to report any appraiser who is believed to be violating USPAP.
Rules are to be promulgated by FRB, OCC, FDIC, NCUA, FHFA and CFPB. Requires FRB to prescribe interim final regulations no later than 90 days after date of enactment of section defining with specificity acts or practices that violate appraisal independence in provision of mortgage lending services for consumer credit transaction secured by principal dwelling of consumer or mortgage brokerage services for such transaction and defining any terms. At issuance of interim regulations, Home Valuation Code of Conduct (HVCC) shall sunset.
Also, OCC, FDIC, NCUA, FHFA and CFPB may jointly issue regulations that address issue of appraisal report portability including regulations that ensure portability of appraisal report between lenders or mortgage brokerage services for transaction. Establishes civil penalties of up to $10,000 per day for first violations and $20,000 for subsequent violations.
Amendments Relating to Appraisal Subcommittee of FFIEC, Appraiser Independence Monitoring, Approved Appraiser Education, Appraisal Management Companies, Appraiser Complaint Hotline, Automated Valuation Models, and Broker Price Opinions
Appraisal Subcommittee and Appraiser and Appraiser Independence Monitoring
Amends FIRREA to require Appraisal Subcommittee of Federal Financial Institutions Examination Council (FFIEC) to annually report to Congress on its assigned functions. Also, assigns Appraisal Subcommittee responsibility to monitor requirements established by states for certification and licensing of individuals who are qualified to perform appraisals including code of professional responsibility and for operations and activities of appraisal management companies.
Appraiser Independence Monitoring
Requires Appraisal Subcommittee to monitor each state appraiser certifying and licensing agency to determine whether such agency’s policies and practices are consistent with maintaining appraiser independence.
Appraiser Education and Complaint Hotline
Requires Appraisal Subcommittee to encourage states to accept courses approved by Appraiser Qualification Board’s Course Approval Program and to establish appraisal complaint hotline if it determines within 6 months after enactment that no national hotline exists to receive complaints regarding appraisal independence and USPAP practices.
Appraisal Management Companies
Requires FRB, OCC, FDIC, NCUA, FHFA and CFPB to establish minimum requirements to be applied by state in registration of Appraisal Management Companies (AMCs), including that they be registered with and subject to supervision by state appraiser certifying and licensing agency, only licensed or certified appraisers are used for federally related transactions, AMC appraisals coordinated by an appraisal management company comply with USPAP, and appraisals are conducted independently and free of inappropriate influence and coercion. Rules apply to subsidiaries of institutions regulated by federal regulatory agency but such subsidiaries are not required to register with state. Provides nothing in section shall be construed as preventing states from establishing requirements in addition to agencies’ rules.
Automated Valuation Models (AVMs)
Requires FRB, OCC, FDIC, NCUA, FHFA and CFPB in consultation with staff of Appraisal Subcommittee and Appraisal Standards Board of Appraisal Foundation to establish regulations implementing quality control standards for AVMs.
Broker Price Opinions
Prohibits use of broker price opinions for purchase of consumer’s principal dwelling as primary basis to determine value of property for purpose of loan secured by property.
Equal Credit Opportunity Act Amendment
Requires creditor to furnish applicant copy of any and all written appraisals and valuations developed in connection with applicant’s application for loan upon appraisal’s completion, but no later than 3 days prior to closing.
RESPA Amendment Relating to Appraisal Management Company Fees
Provides HUD-1 may—but is not required to—include in case of an appraisal coordinated by an appraisal management company, clear disclosure of fee paid directly to appraiser by appraisal management company and administration fee charged by such company.
GAO Study on the Effectiveness and Impact of Various Appraisal Methods
Requires that GAO conduct study of effectiveness and impact of appraisal methods, appraisal valuation models, appraisal distribution channels including appraisal management companies and independent appraisers, HVCC and Appraisal Subcommittee’s functions. Requires GAO to submit a status report and any preliminary findings to Committees of Congress within 90 days after enactment and submit study 12 months after enactment.
Subtitle G: mortgage resolution and modification
Multifamily Mortgage Resolution Program
Authorizes development of HUD administered program to provide foreclosure assistance to promote transfer of properties with five or more units that are at risk of foreclosure. As result of foreclosure, tenants would be protected from losing their homes. Section calls for Secretary to develop program that can provide financing, addresses affordability, and might include subsidies, rehabilitation and reserves for property. The goal of program would be to transfer property to new, responsible and lawful owners committed to continued affordability of property and to maintain services to existing tenants.
Treasury must revise its guidelines to require servicers to provide borrower with data inputs it used to obtain NPV determination if borrower is denied HAMP. Requires creation of website for borrowers to conduct NPV analysis, submit applications for HAMP and get Treasury’s NPV calculation methodology.
Public Availability of Information of MHA Program
Increases data reported to public and Congress and breaks such information down by servicer and by individual record level.
Protecting Tenants at Foreclosure Act (PFTA) (Section 1484) – Expands scope of PTFA to now protect tenants who sign leases prior to “complete” title transfer to successor or person. Extends PTFA from year 2012 to 2014.
Subtitle H: Miscellaneous Provisions
Sense of Congress Regarding The Importance Of GSE Reform
Sets forth several findings about government-sponsored enterprises and sense of Congress that meaningful structural reform of government-sponsored enterprises is necessary to enhance protection, limitation and regulation of terms and practices of residential mortgage credit.
GAO Study on Government Efforts to Combat Mortgage Foreclosure Rescue Scams Comptroller General must report to Congress on effectiveness of inter-agency task force to combat mortgage foreclosure rescue and modification fraud scams, recommendations for legislative protections, sufficiency of resources to crackdown on scams.
Reporting of Mortgage Data by State
Requires modification data currently collected by OCC and OTS to be reported to Congress quarterly by state.
Study on Effect of Drywall Presence on Foreclosures
Requires HUD, in consultation with Treasury, to conduct study on effects of drywall imported from China between 2004 – 2007 on residential mortgage loan foreclosures and availability of property insurance for properties.
Legal Assistance for Foreclosure Related Issues
Authorizes $35 million for FY 2011 and 2012 for Secretary to establish program to make grants available to state and local organizations to provide foreclosure related legal services to low- and moderate-income homeowners and tenants. Priority consideration for grants would be given to 125 metropolitan areas with highest foreclosure rates. Funds cannot be used to support class actions. Effective date is date of enactment.