The House Financial Services Committee on July 29 approved H.R. 5148, the Access to Affordable Mortgages Act, which would grant certain “high-risk” mortgages an exemption from having an appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice, the Appraisal Institute reported.

AI supports this legislation because H.R. 5148 could open up a range of valuation services and create flexibility for lenders to order an appraisal when the development and reporting requirements suit the needs of the assignment. Currently, appraisals are not required for loans of $250,000 or less, but federal bank regulatory policy requires lenders to obtain an “evaluation” so they can fully understand the collateral risk involved with the loan. 

While Section 2 in the legislation would provide an exemption from evaluations in cases where the value of loans classified as “high-risk” is below $250,000 and kept on the creditor’s balance sheet for at least three years, the number of loans that fit this criteria is expected to be very small. And despite the exemption, AI said it expects many banks to still obtain an appraisal because it’s good business practice. 

AI continues to track H.R. 5148, noting that it’s unsure when the legislation will get a vote on the House floor.