Title 15, Commerce and TradeRelease 119-110
§1639h Property Appraisal Requirements
Title 15 › CHAPTER 41 — CONSUMER CREDIT PROTECTION › SUBCHAPTER I — CONSUMER CREDIT COST DISCLOSURE › Part B — Credit Transactions › § 1639h
Summary
Creditors must get a written appraisal before giving a higher-risk mortgage. The appraisal must be done by a state-licensed or certified appraiser who looks inside the home in person, unless rules say otherwise. If the seller bought the property within the last 180 days for less than the current sale price, the lender must get a second appraisal from a different licensed appraiser that explains the price change, market shifts, and any improvements. The borrower cannot be charged for that second appraisal. The federal agencies will write rules to carry out these steps and may exempt some loan types if doing so is safe and in the public interest. Lenders must give the borrower one copy of the appraisal free and at least 3 days before closing. When someone first applies, the lender must say the appraisal is for the lender’s use and the applicant can pay for their own separate appraisal if they want. A lender who willfully fails to get the required appraisal must pay the borrower $2,000. A “higher-risk mortgage” means a home loan that is not a qualified mortgage and has an APR higher than the average prime offer rate by 1.5% (certain first liens), 2.5% (larger first liens), or 3.5% (subordinate liens).
Full Legal Text
Title 15, §1639h
Commerce and Trade, Source: USLM XML via OLRC
(a)In general
A creditor may not extend credit in the form of a higher-risk mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged prepared in accordance with the requirements of this section.
(b)Appraisal requirements
(1)Physical property visit
Subject to the rules prescribed under paragraph (4), an appraisal of property to be secured by a higher-risk mortgage does not meet the requirement of this section unless it is performed by a certified or licensed appraiser who conducts a physical property visit of the interior of the mortgaged property.
(2)Second appraisal under certain circumstances
(A)In general
If the purpose of a higher-risk mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at a price that was lower than the current sale price of the property, the creditor shall obtain a second appraisal from a different certified or licensed appraiser. The second appraisal shall include an analysis of the difference in sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale.
(B)No cost to applicant
The cost of any second appraisal required under subparagraph (A) may not be charged to the applicant.
(3)Certified or licensed appraiser defined
For purposes of this section, the term “certified or licensed appraiser” means a person who—
(A)is, at a minimum, certified or licensed by the State in which the property to be appraised is located; and
(B)performs each appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [12 U.S.C. 3331 et seq.], and the regulations prescribed under such title, as in effect on the date of the appraisal.
(4)Regulations
(A)In general
The Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau shall jointly prescribe regulations to implement this section.
(B)Exemption
The agencies listed in subparagraph (A) may jointly exempt, by rule, a class of loans from the requirements of this subsection or subsection (a) if the agencies determine that the exemption is in the public interest and promotes the safety and soundness of creditors.
(c)Free copy of appraisal
A creditor shall provide 1 copy of each appraisal conducted in accordance with this section in connection with a higher-risk mortgage to the applicant without charge, and at least 3 days prior to the transaction closing date.
(d)Consumer notification
At the time of the initial mortgage application, the applicant shall be provided with a statement by the creditor that any appraisal prepared for the mortgage is for the sole use of the creditor, and that the applicant may choose to have a separate appraisal conducted at the expense of the applicant.
(e)Violations
In addition to any other liability to any person under this subchapter, a creditor found to have willfully failed to obtain an appraisal as required in this section shall be liable to the applicant or borrower for the sum of $2,000.
(f)Higher-risk mortgage defined
For purposes of this section, the term “higher-risk mortgage” means a residential mortgage loan, other than a reverse mortgage loan that is a qualified mortgage, as defined in section 1639c of this title, secured by a principal dwelling—
(1)that is not a qualified mortgage, as defined in section 1639c of this title; and
(2)with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as defined in section 1639c of this title, as of the date the interest rate is set—
(A)by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12;
(B)by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12; and
(C)by 3.5 or more percentage points for a subordinate lien residential mortgage loan.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Financial Institutions Reform, Recovery, and
Enforcement
Act of 1989, referred to in subsec. (b)(3)(B), is Pub. L. 101–73, Aug. 9, 1989, 103 Stat. 183. Title XI of the Act is classified principally to chapter 34A (§ 3331 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see
Short Title
of 1989 Amendment note set out under section 1811 of Title 12 and Tables.
Statutory Notes and Related Subsidiaries
Effective Date
Section effective on the date on which final
Regulations
implementing such section take effect, or on the date that is 18 months after the designated transfer date if such
Regulations
have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an
Effective Date
of 2010 Amendment note under section 1601 of this title. Appraisal Modernization Federally Backed Mortgage Loan Act; Reconsideration of Value Pub. L. 119–101, title VII, § 704(a), July 11, 2026, 140 Stat. 956, provided that: “(1) Federally backed mortgage loan defined.—In this subsection, the term ‘federally backed mortgage loan’ has the meaning given the term in section 4022 of the CARES Act (15 U.S.C. 9056). “(2) Requirement.—The Secretary of Agriculture, the Secretary of Veterans Affairs, the Commissioner of the Federal Housing Administration, and the Director of the Federal Housing Finance Agency shall each implement and maintain requirements that creditors of a federally backed mortgage loan have a review and resolution procedure for a consumer-initiated reconsideration of value or subsequent appraisal in connection with a consumer credit transaction secured by a consumer’s principal dwelling.”
Reference
Citations & Metadata
Citation
15 U.S.C. § 1639h
Title 15, Commerce and Trade
Last Updated
Sep 22, 2026
Release point: 119-110