H.R. 5148- Congress’ Newest Blunder That May Cause Many More Future Foreclosures

Congress’ summary:

Access to Affordable Mortgages Act of 2014 – Amends the Truth in Lending Act to exempt from property appraisal requirements certain higher-risk mortgage loans of $250,000 or less if such a loan appears on the balance sheet of the creditor of the loan for at least three years.

Exempts certain individuals required to make such reports from penalties for failure to report any appraisers reasonably suspected of failing to comply with the Uniform Standards of Professional Appraisal Practice, of violating applicable laws, or of otherwise engaging in unethical or unprofessional conduct.

Amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to exempt such higher-risk mortgage loans from property appraisal or evaluation standard requirements”

In layman’s terms, this amends the Truth in Lending Act (TILA) in that the bank no longer is obligated to conduct an appraiser on certain lower priced homes; $250,000 or less.  Typically, a mortgage is only given based on the appraised amount; the value of the home at the time it is purchased.  Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy.  This apparenty “eases compliance burdens on lenders and increases credit access for lower- and middle-income borrowers.” as stated by U.S. Representative Randy Hultgren (IL-14).

If passed, essentially if someone if asked to pay $200,000 for their $50,000 house they can, and the bank has no liability for lending this money to buy the “ripoff” house as they do not have to conduct an appraisal.

This will surely lead to many many more underwater homes and foreclosures in the future.

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