§3356 Exemption From Appraisals of Real Estate Located in Rural Areas

Summary

A loan does not have to get a real estate appraisal if these rules are met. "Mortgage originator" means the person defined in 15 U.S.C. 1602. "Transaction value" means the loan amount, including loans that are part of a pool. No appraisal is required when the property is in a rural area as defined in 12 C.F.R. 1026.35(b)(2)(iv)(A), the loan is under $400,000, and the mortgage originator is supervised by a federal bank regulator. Also, within 3 days after the Closing Disclosure is given to the borrower, the originator or its agent must contact at least 3 state-certified or state-licensed appraisers from its approved list in the market area and keep written proof that none were available within 5 business days beyond customary fee and timing standards. The no-appraisal rule does not apply if a federal regulator requires an appraisal under 12 C.F.R. 225.63(c), 323.3(c), 34.43(c), or 722.3(e), or if the loan is a high-cost mortgage as defined in 15 U.S.C. 1602. A loan made without an appraisal generally cannot be sold or transferred except in narrow cases (bankruptcy or failure; transfer to another federally regulated institution that keeps it in portfolio; merger or acquisition; or to a wholly owned subsidiary that keeps it as the originator’s asset). Federal regulators must watch originators that make many such loans to make sure they follow the contact-and-document rules for each loan.