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All of our loans are HPML with the exception of Business loans. Our loans are closed end with the mortgages having an open end feature. My question is: If we already have a loan on the books with an appraisal that is less than5 years old, and the applicant comes in and borrows more money are we required to get a new appraisal or can we do an evaluation on the property. We have borrowers who come in quite frequently because of the open end in their mortgage. With that being said if the loan is an HPML and is not exempt will we have to get a new appraisal each time they get a new loan. Internal auditors are here and they are saying yes. Please advise.
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An evaluation will not work for a loan subject to 1026.36(c), an appraisal is required. Regulation Z does not address the issue of reusing an existing appraisal. If the existing appraisal is to be used it must meet the requirements of 1026.35(c)(3). You also need to consider the Interagency Appraisal Guidelines (FIRREA) and your bank policy.
The transaction may be exempt under 1026.35(c)(2) (i.e. less than $25,000, QM, etc.) so no appraisal would be required by Regulation Z.
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