Final HPML Appraisal Rule Released – MH Exemptions Eroded

Last Thursday the Board of Governors of the Federal Reserve System (Board); Bureau of Consumer Financial Protection (Bureau); Federal Deposit Insurance Corporation (FDIC); Federal Housing Finance Agency (FHFA); National Credit Union Administration (NCUA); and Office of the Comptroller of the Currency, Treasury (OCC) issued the Higher-Priced Mortgage Loan (or HPML) Appraisal Rule.

The Agencies adopted a temporary exemption of 18 months (until July 18, 2015) for all loans secured in whole or in part by a manufactured home.  Starting on July 18, 2015, transactions secured by a new manufactured home and land will be exempt from the requirement that the appraisal include a physical inspection of the interior of the property; transactions secured by an existing (used) manufactured home and land will not be exempt from the rules; and transactions secured solely by a manufactured home and not land will be exempt from the rules if the creditor gives the consumer one of three types of information about the home’s value, discussed in more detail below.

All loans secured in whole or in part by a manufactured home will be exempt from the HPML appraisal rules for 18 months, until July 18, 2015. For loan applications received on July 18, 2015 or after, the following changes will apply:

Transactions secured by a new manufactured home and land will be exempt from the requirement that the appraisal include a physical inspection of the interior of the property, but will be subject to all other HPML appraisal requirements, including the requirement that a properly licensed and certified appraiser conducts the appraisal. Transactions secured by an existing (used) manufactured home and land will not be exempt from the rules, meaning a full appraisal including an interior inspection conducted by a certified appraiser must be performed.

Transactions secured solely by a manufactured home and not land will be exempt from the rules if the creditor gives the consumer one of three types of information about the home’s value:

• The manufacturer’s invoice of the unit cost (for a transaction secured by a new manufactured home).
• An independent cost service unit cost.
• A valuation conducted by an individual who has no financial interest in the property or credit transaction, and has training in valuing manufactured homes.  An example would be an appraisal conducted according to procedures approved by the U.S. Department of Housing and Urban Development (HUD) for existing (used) home-only transactions.

The temporary exemption for manufactured home loans and the exemptions for certain streamlined refinances and loans of $25,000 or less will be effective on January 18, 2014, the same date on which the January 2013 HPML Appraisal Final Rule will become effective.

The final appraisal rule as well as all other final rules impacting our manufactured housing industry will be discussed in greater detail at the Fort Worth TMHA Dodd-Frank Implementation Workshop January 13 -14.