August 15, 2012 / 3:06 PM / 7 years ago

Regulators propose appraisals for high risk home loans

Home owners speak with Bank of America representatives as they try to get home loan modifications during the Neighborhood Assistance Corporation of America event in Phoenix, February 4, 2011. REUTERS/Joshua Lott

WASHINGTON (Reuters) - Regulators on Wednesday proposed establishing appraisal requirements for high-risk mortgages, a plan designed to give prospective home buyers proper information.

Creditors would be required to use a licensed appraiser to inspect the interior of the property and then would be required to provide consumers with a free copy of the appraisal report, under the proposal issued by six federal supervisors.

Creditors would also be required to obtain an additional appraisal if the seller acquired the property for a lower price during the past six months - a requirement designed to address fraudulent property flipping, said the regulators.

The rule was issued by the Federal Reserve, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp, the Federal Housing Finance Agency, the National Credit Union Administration and the Office of the Comptroller of the Currency.

The public will have until mid-October to comment on the proposal.

Reporting By Rachelle Younglai; Editing by Chizu Nomiyama

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