Appraisals-Availability to Applicants and Requirements for Transactions Involving an Existing Extension of Credit, 75746-75748 [2014-29635]

Download as PDF 75746 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations servicer of a loan described in paragraph (a) of this section within 60 days after the effective date of the change. This notice may be provided electronically if electronic transmission is satisfactory to the Director of FEMA’s designee. Upon any change in the servicing of a loan described in paragraph (a) of this section, the duty to provide notice under this paragraph (b) shall transfer to the transferee servicer. tkelley on DSK3SPTVN1PROD with RULES Appendix A to Part 339—Sample Form of Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance We are giving you this notice to inform you that: The building or mobile home securing the loan for which you have applied is or will be located in an area with special flood hazards. The area has been identified by the Director of the Federal Emergency Management Agency (FEMA) as a special flood hazard area using FEMA’s Flood Insurance Rate Map or the Flood Hazard Boundary Map for the following community: llll. This area has at least a one percent (1%) chance of a flood equal to or exceeding the base flood elevation (a 100-year flood) in any given year. During the life of a 30-year mortgage loan, the risk of a 100-year flood in a special flood hazard area is 26 percent (26%). Federal law allows a lender and borrower jointly to request the Director of FEMA to review the determination of whether the property securing the loan is located in a special flood hazard area. If you would like to make such a request, please contact us for further information. llllllllll The community in which the property securing the loan is located participates in the National Flood Insurance Program (NFIP). Federal law will not allow us to make you the loan that you have applied for if you do not purchase flood insurance. The flood insurance must be maintained for the life of the loan. If you fail to purchase or renew flood insurance on the property, federal law authorizes and requires us to purchase the flood insurance for you at your expense. • Flood insurance coverage under the NFIP may be purchased through an insurance agent who will obtain the policy either directly through the NFIP or through an insurance company that participates in the NFIP. Flood insurance also may be available from private insurers that do not participate in the NFIP. • At a minimum, flood insurance purchased must cover the lesser of: (1) The outstanding principal balance of the loan; or (2) the maximum amount of coverage allowed for the type of property under the NFIP. Flood insurance coverage under the NFIP is limited to the overall value of the property securing the loan minus the value of the land on which the property is located. • Federal disaster relief assistance (usually in the form of a low-interest loan) may be available for damages incurred in excess of VerDate Sep<11>2014 17:14 Dec 18, 2014 Jkt 235001 your flood insurance if your community’s participation in the NFIP is in accordance with NFIP requirements. llllllllllFlood insurance coverage under the NFIP is not available for the property securing the loan because the community in which the property is located does not participate in the NFIP. In addition, if the non-participating community has been identified for at least one year as containing a special flood hazard area, properties located in the community will not be eligible for federal disaster relief assistance in the event of a federally-declared flood disaster. PART 391—FORMER OFFICE OF THRIFT SUPERVISION REGULATIONS 2. The authority citation for Part 391 is revised to read as follows: ■ Authority: 12 U.S.C. 1819. Subpart A also issued under 12 U.S.C. 1462a; 1463; 1464; 1828; 1831p-1; 1881– 1884; 15 U.S.C. 1681w; 15 U.S.C. 6801; 6805. Subpart B also issued under 12 U.S.C. 1462a; 1463; 1464; 1828; 1831p-1; 1881– 1884; 15 U.S.C.1681w; 15 U.S.C. 6801; 6805. Subpart C also issued under 12 U.S.C. 1462a; 1463; 1464; 1828; 1831p-1; and 1881– 1884; 15 U.S.C. 1681m; 1681w. Subpart E also issued under 12 U.S.C. 1467a; 1468; 1817; 1831i. Subpart D—[Removed and Reserved] 3. Remove and reserve Subpart D consisting of §§ 391.30 through 391.39 and the Appendix to Subpart D. ■ Dated at Washington, DC, this 16th day of December 2014. By Order of the Board of Directors, Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2014–29761 Filed 12–18–14; 8:45 am] BILLING CODE P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Parts 701 and 722 RIN 3133–AE36 Appraisals—Availability to Applicants and Requirements for Transactions Involving an Existing Extension of Credit National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: As part of NCUA’s Regulatory Modernization Initiative, the NCUA Board (Board) is revising two of NCUA’s regulations regarding appraisals. In response to a recent amendment to the Consumer Financial Protection Bureau’s (CFPB) Regulation B, the Board is eliminating from NCUA’s regulations SUMMARY: PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 the now duplicative requirement that federal credit unions (FCUs) make available, to any requesting member, a copy of the appraisal used in connection with that member’s application for a loan secured by a first lien on a dwelling. Also, the Board is amending NCUA’s appraisal regulations by expanding the current exemption for certain transactions involving an existing extension of credit. More specifically, under the expanded exemption, a federally insured credit union (FICU) will be permitted to refinance or modify a real estate-related loan held by the FICU, without having to obtain another appraisal, if there is no advancement of new monies or if there is adequate collateral protection even with the advancement of new monies. Lastly, the Board is making a minor technical amendment to the definition of the term ‘‘application.’’ DATES: This rule is effective January 20, 2015. FOR FURTHER INFORMATION CONTACT: Pamela Yu, Senior Staff Attorney, Office of General Counsel, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314–3428 or telephone (703) 518–6593. SUPPLEMENTARY INFORMATION: I. Background and Proposal II. Final Rule III. Regulatory Procedures I. Background and Proposal A. Background Each year, NCUA reviews one-third of its regulations for substance and to ensure they are clear, current, and appropriate in scope. NCUA notifies the public of those regulations under review so that the public may have an opportunity to provide comments on those regulations. In 2013, NCUA reviewed part 722, along with several other parts of NCUA’s regulations.1 Part 722 sets forth the appraisal requirements for federallyrelated transactions involving real estate. The appraisal requirements in part 722 are generally equivalent to the appraisal requirements of the other federal financial regulatory agencies.2 However, NCUA received numerous comments during the public comment period requesting a specific change to § 722.3(a)(5) to better align NCUA’s appraisal requirements with those of the 1 As part of the 2013 regulatory review process, NCUA also reviewed parts 711, 712, 713, 714, 715, 716, 717, 721, 723, 724, 725, 740, 741, 745, and 747 of NCUA’s regulations. 2 For purposes of this rulemaking, these agencies are the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of Currency. E:\FR\FM\19DER1.SGM 19DER1 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations tkelley on DSK3SPTVN1PROD with RULES other federal financial regulatory agencies. Specifically, commenters requested that NCUA expand the current appraisal exemption for existing extensions of credit to allow a FICU to refinance or modify a real estate-related loan held by that FICU without having to obtain an additional appraisal. In addition, a number of commenters requested that NCUA eliminate the now duplicative portion of § 701.31(c)(5) of NCUA’s regulations, which requires an FCU to retain the appraisal used in connection with a real estate-related loan application for a period of 25 months and to make a copy of the appraisal available to the applicant upon request. A recent amendment to § 1002.14 of CFPB’s Regulation B requires that all creditors, including FCUs, automatically provide applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling. As a result of this amendment to Regulation B, the requirements of § 701.31(c)(5) of NCUA’s regulations and § 1002.14 of Regulation B overlap with respect to providing copies of appraisals used in connection with an application for a loan secured by a first lien on a dwelling. B. June 2014 Proposed Rule In June 2014, as part of NCUA’s regulatory review and in response to public comments received, the Board issued a proposed rule to amend two of NCUA’s regulations regarding appraisals.3 Consistent with NCUA’s Regulatory Modernization Initiative, the proposed amendments improve NCUA’s regulations by better aligning them with the current marketplace, reduce costs for FICUs and their members, and remove outdated regulatory requirements. Specifically, the Board proposed to make the following three changes to NCUA’s regulations. First, as requested by the public, the Board proposed to eliminate the now duplicative requirement in NCUA’s regulations that requires FCUs to make available, to any requesting member, a copy of the appraisal used in connection with that member’s application for a loan secured by a first lien on a dwelling. FCUs would still be required to provide a borrower with a copy of the appraisal used for a loan involving a subordinate lien on a dwelling. Additionally, the Board proposed to amend § 722.3(a)(5) of NCUA’s appraisal regulations to better align this appraisal exemption for existing extensions of 3 79 FR 36248 (June 26, 2014). VerDate Sep<11>2014 16:17 Dec 18, 2014 Jkt 235001 credit with that applicable to banks. The current provision exempts from the appraisal requirement transactions that involve an existing extension of credit at the FICU, provided that: (i) There is no advancement of new monies, other than funds necessary to cover reasonable closing costs, and (ii) there has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the credit union’s real estate collateral protection after the transaction. Under the current regulation, for a transaction involving an existing extension of credit to be exempt from the general requirement to obtain an appraisal, the transaction must satisfy both the criteria in paragraph (i) and the criteria in paragraph (ii) of current § 722.3(a)(5). The revised provision will allow FICUs to refinance or modify existing real estate-related loans without obtaining an appraisal if (1) there is no advancement of new monies; or (2) in transactions where there is an advancement of new monies, if there is no obvious and material change in market conditions or physical aspects of the property. In addition to achieving parity with banking regulations, the amendment gives FICUs more latitude to modify or refinance existing real estate loans for distressed borrowers without having to obtain an appraisal. Finally, the Board proposed to make a minor technical amendment to correct and update the definition of the term ‘‘application’’ in § 701.31(a)(1) of NCUA’s regulations. Current § 701.31(a)(1) defines the term ‘‘application’’ for purposes of part 701 as carrying the same ‘‘meaning of that term as defined in 12 CFR 1002.2(f) (Regulation B)’’ and then provides a parenthetical quoting the text of the Regulation B definition of application, which has since been revised. As a result, the definition of application in § 1002.2(f) no longer matches the quote in § 701.31(a)(1). The technical amendment to § 701.31(a)(1) will update the definition. II. Final Rule NCUA received thirteen comments on the proposed rule. Two comments were received from trade associations representing credit unions, seven from state credit union leagues, one from an FCU, and three from federally insured, state-chartered credit unions. All of the comments were supportive of the proposal. Commenters generally indicated that the proposed amendments will provide greater parity and consistency among federal financial regulations, eliminate redundancies, and benefit credit unions and their PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 75747 members by easing administrative and cost impediments to successful loan modifications. Several commenters, however, requested clarification of current regulatory requirements or offered comments beyond the scope of the June 2014 proposal. For example, two commenters suggested eliminating the current requirement that FCUs make available, to any requesting member, a copy of the appraisal used in connection with that member’s application for a dwelling secured by a subordinate lien. The Board, however, proposed only to eliminate the portion of the current requirement in § 701.31(c)(5) relative to loans secured by a first lien on a dwelling because it is duplicative of Regulation B. The Board did not propose to eliminate those current protections provided under § 701.31(c)(5) for FCU members regarding loans secured by subordinate liens because that portion of NCUA’s regulations are not duplicative of Regulation B. As stated in the proposed rule, the consumer protections provided by NCUA’s regulation and Regulation B do not overlap entirely. Under current § 701.31(c)(5), FCUs are required under certain circumstances to provide copies of appraisals used in connection with an application for a real estate-related loan, which includes any loan to be secured by a first lien or a subordinate lien on a dwelling. The protections provided in § 1002.14 of Regulation B extend to appraisals developed in connection with an application for a loan secured by a first lien on a dwelling. Despite this, the Board continues to believe the requirements of § 701.31(c)(5) relating to appraisals used in connection with a loan secured by a subordinate lien on a dwelling must be retained as a consumer protection for FCU members. Several commenters asked for additional amendments to modify or clarify existing definitions or other current regulatory requirements. For example, one commenter requested clarification of the scope and meaning of the term ‘‘dwelling’’ in § 701.31(a)(2)) of NCUA’s regulations. The Board notes that the proposed rule did not modify any existing definitions or impose any new requirements on credit unions. All definitions in the current regulation have the same meaning under this final rule as they do under the current regulation. The Board also emphasizes that this final rule does not modify the 2010 Federal Financial Institutions Examination Council’s interagency appraisal and evaluation guidelines and credit unions may continue to rely on that guidance. E:\FR\FM\19DER1.SGM 19DER1 75748 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations Accordingly, the Board is adopting the June 2014 proposed rule as final without change. III. Regulatory Procedures A. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) 4 requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small entities (defined for purposes of the RFA to include credit unions with assets less than $50 million).5 The amendments to parts 701 and 722 will only reduce regulatory impacts on credit unions by exempting them from certain regulatory requirements. Accordingly, the Board certifies the final rule will not have a significant economic impact on a substantial number of small credit unions. B. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or increases an existing burden.6 For purposes of the PRA, a paperwork burden may take the form of a reporting or recordkeeping requirement, both referred to as information collections. This final rule would not impose or expand upon any existing reporting or recordkeeping requirements. Accordingly, this final rule would not create new paperwork burdens or increase any existing paperwork burdens. tkelley on DSK3SPTVN1PROD with RULES C. Executive Order 13132 Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. NCUA, an independent regulatory agency, as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. The final rule would not have substantial direct effects on the states, on the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of government. NCUA has, therefore, determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order. U.S.C. 601 et seq. 5 78 FR 4032 (Jan. 18, 2013). 6 44 U.S.C. 3507(d); 5 CFR part 1320. D. Assessment of Federal Regulations and Policies on Families NCUA has determined that this final rule will not affect family well-being within the meaning of § 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105–277, 112 Stat. 2681 (1998). E. Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996 7 (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act.8 NCUA does not believe this final rule is a ‘‘major rule’’ within the meaning of the relevant sections of SBREFA because it will only reduce regulatory burden on credit unions by exempting them from certain regulatory requirements. NCUA has submitted the rule to the Office of Management and Budget for its determination in that regard. List of Subjects 16:17 Dec 18, 2014 Jkt 235001 [Amended] 2. Amend § 701.31 as follows: a. In paragraph (a)(1), remove the words ‘‘, which is as follows:’’ and remove the indented definition parenthetical ‘‘An oral or written request for an extension of credit that is made in accordance with procedures established by a creditor for the type of credit requested’’. ■ b. In paragraph (c)(5) in the first sentence, remove the words ‘‘a copy of the appraisal used in connection with that member’s real estate-related loan application’’ and add in their place the words ‘‘a copy of the appraisal used in connection with that member’s application for a loan to be secured by a subordinate lien on a dwelling’’, and, in the second sentence, remove the words ‘‘real estate-related loan application’’ and add in their place the words ‘‘application for a loan to be secured by a subordinate lien on a dwelling’’. ■ ■ PART 722—APPRAISALS 3. The authority citation for part 722 continues to read as follows: ■ 12 CFR Part 701 Authority: 12 U.S.C. 1766, 1789 and 3339. Advertising, Aged, Civil rights, Credit, Credit unions, Fair housing, Individuals with disabilities, Insurance, Marital status discrimination, Mortgages, Religious discrimination, Reporting and recordkeeping requirements, Sex discrimination. 12 CFR Part 722 Appraisals, Credit unions, Mortgages, Reporting and recordkeeping requirements. § 722.3 [Amended] 4. Amend § 722.3 as follows: a. In paragraph (a)(5) introductory text add the word ‘‘lending’’ before the words ‘‘credit union’’; ■ b. In paragraph (a)(5)(i) remove the word ‘‘and’’ and add in its place the word ‘‘or’’; and ■ c. In paragraph (a)(5)(ii) add the words ‘‘, even with the advancement of new monies’’ to the end of the paragraph. ■ ■ By the National Credit Union Administration Board on December 11, 2014. Gerard Poliquin, Secretary of the Board. [FR Doc. 2014–29635 Filed 12–18–14; 8:45 am] For the reasons discussed above, the NCUA Board amends 12 CFR parts 701 and 722 as follows: ENVIRONMENTAL PROTECTION AGENCY PART 701—ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS [EPA–R04–OAR–2014–0267; FRL–9920–60– Region 4] 1. The authority citation for part 701 continues to read as follows: ■ Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601–3610. Section 701.35 is also authorized by 42 U.S.C. 4311–4312. 45 VerDate Sep<11>2014 § 701.31 7 Public 85 PO 00000 Law 104–121, 110 Stat. 857 (1996). U.S.C. 551. Frm 00014 Fmt 4700 Sfmt 4700 BILLING CODE 7535–01–P 40 CFR Parts 52 and 81 Approval of Implementation Plans and Designation of Areas; Georgia; Redesignation of the Georgia Portion of the Chattanooga, 1997 PM2.5 Nonattainment Area to Attainment Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: On September 14, 2012, the Georgia Department of Natural Resources, through the Georgia Environmental Protection Division (GA SUMMARY: E:\FR\FM\19DER1.SGM 19DER1

Agencies

[Federal Register Volume 79, Number 244 (Friday, December 19, 2014)]
[Rules and Regulations]
[Pages 75746-75748]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29635]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701 and 722

RIN 3133-AE36


Appraisals--Availability to Applicants and Requirements for 
Transactions Involving an Existing Extension of Credit

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: As part of NCUA's Regulatory Modernization Initiative, the 
NCUA Board (Board) is revising two of NCUA's regulations regarding 
appraisals. In response to a recent amendment to the Consumer Financial 
Protection Bureau's (CFPB) Regulation B, the Board is eliminating from 
NCUA's regulations the now duplicative requirement that federal credit 
unions (FCUs) make available, to any requesting member, a copy of the 
appraisal used in connection with that member's application for a loan 
secured by a first lien on a dwelling. Also, the Board is amending 
NCUA's appraisal regulations by expanding the current exemption for 
certain transactions involving an existing extension of credit. More 
specifically, under the expanded exemption, a federally insured credit 
union (FICU) will be permitted to refinance or modify a real estate-
related loan held by the FICU, without having to obtain another 
appraisal, if there is no advancement of new monies or if there is 
adequate collateral protection even with the advancement of new monies. 
Lastly, the Board is making a minor technical amendment to the 
definition of the term ``application.''

DATES: This rule is effective January 20, 2015.

FOR FURTHER INFORMATION CONTACT: Pamela Yu, Senior Staff Attorney, 
Office of General Counsel, National Credit Union Administration, 1775 
Duke Street, Alexandria, Virginia 22314-3428 or telephone (703) 518-
6593.

SUPPLEMENTARY INFORMATION: 
I. Background and Proposal
II. Final Rule
III. Regulatory Procedures

I. Background and Proposal

A. Background

    Each year, NCUA reviews one-third of its regulations for substance 
and to ensure they are clear, current, and appropriate in scope. NCUA 
notifies the public of those regulations under review so that the 
public may have an opportunity to provide comments on those 
regulations.
    In 2013, NCUA reviewed part 722, along with several other parts of 
NCUA's regulations.\1\ Part 722 sets forth the appraisal requirements 
for federally-related transactions involving real estate. The appraisal 
requirements in part 722 are generally equivalent to the appraisal 
requirements of the other federal financial regulatory agencies.\2\
---------------------------------------------------------------------------

    \1\ As part of the 2013 regulatory review process, NCUA also 
reviewed parts 711, 712, 713, 714, 715, 716, 717, 721, 723, 724, 
725, 740, 741, 745, and 747 of NCUA's regulations.
    \2\ For purposes of this rulemaking, these agencies are the 
Board of Governors of the Federal Reserve System, Federal Deposit 
Insurance Corporation, and Office of the Comptroller of Currency.
---------------------------------------------------------------------------

    However, NCUA received numerous comments during the public comment 
period requesting a specific change to Sec.  722.3(a)(5) to better 
align NCUA's appraisal requirements with those of the

[[Page 75747]]

other federal financial regulatory agencies. Specifically, commenters 
requested that NCUA expand the current appraisal exemption for existing 
extensions of credit to allow a FICU to refinance or modify a real 
estate-related loan held by that FICU without having to obtain an 
additional appraisal.
    In addition, a number of commenters requested that NCUA eliminate 
the now duplicative portion of Sec.  701.31(c)(5) of NCUA's 
regulations, which requires an FCU to retain the appraisal used in 
connection with a real estate-related loan application for a period of 
25 months and to make a copy of the appraisal available to the 
applicant upon request. A recent amendment to Sec.  1002.14 of CFPB's 
Regulation B requires that all creditors, including FCUs, automatically 
provide applicants free copies of all appraisals and other written 
valuations developed in connection with an application for a loan to be 
secured by a first lien on a dwelling. As a result of this amendment to 
Regulation B, the requirements of Sec.  701.31(c)(5) of NCUA's 
regulations and Sec.  1002.14 of Regulation B overlap with respect to 
providing copies of appraisals used in connection with an application 
for a loan secured by a first lien on a dwelling.

B. June 2014 Proposed Rule

    In June 2014, as part of NCUA's regulatory review and in response 
to public comments received, the Board issued a proposed rule to amend 
two of NCUA's regulations regarding appraisals.\3\ Consistent with 
NCUA's Regulatory Modernization Initiative, the proposed amendments 
improve NCUA's regulations by better aligning them with the current 
marketplace, reduce costs for FICUs and their members, and remove 
outdated regulatory requirements.
---------------------------------------------------------------------------

    \3\ 79 FR 36248 (June 26, 2014).
---------------------------------------------------------------------------

    Specifically, the Board proposed to make the following three 
changes to NCUA's regulations. First, as requested by the public, the 
Board proposed to eliminate the now duplicative requirement in NCUA's 
regulations that requires FCUs to make available, to any requesting 
member, a copy of the appraisal used in connection with that member's 
application for a loan secured by a first lien on a dwelling. FCUs 
would still be required to provide a borrower with a copy of the 
appraisal used for a loan involving a subordinate lien on a dwelling.
    Additionally, the Board proposed to amend Sec.  722.3(a)(5) of 
NCUA's appraisal regulations to better align this appraisal exemption 
for existing extensions of credit with that applicable to banks. The 
current provision exempts from the appraisal requirement transactions 
that involve an existing extension of credit at the FICU, provided 
that: (i) There is no advancement of new monies, other than funds 
necessary to cover reasonable closing costs, and (ii) there has been no 
obvious and material change in market conditions or physical aspects of 
the property that threatens the adequacy of the credit union's real 
estate collateral protection after the transaction. Under the current 
regulation, for a transaction involving an existing extension of credit 
to be exempt from the general requirement to obtain an appraisal, the 
transaction must satisfy both the criteria in paragraph (i) and the 
criteria in paragraph (ii) of current Sec.  722.3(a)(5).
    The revised provision will allow FICUs to refinance or modify 
existing real estate-related loans without obtaining an appraisal if 
(1) there is no advancement of new monies; or (2) in transactions where 
there is an advancement of new monies, if there is no obvious and 
material change in market conditions or physical aspects of the 
property. In addition to achieving parity with banking regulations, the 
amendment gives FICUs more latitude to modify or refinance existing 
real estate loans for distressed borrowers without having to obtain an 
appraisal.
    Finally, the Board proposed to make a minor technical amendment to 
correct and update the definition of the term ``application'' in Sec.  
701.31(a)(1) of NCUA's regulations. Current Sec.  701.31(a)(1) defines 
the term ``application'' for purposes of part 701 as carrying the same 
``meaning of that term as defined in 12 CFR 1002.2(f) (Regulation B)'' 
and then provides a parenthetical quoting the text of the Regulation B 
definition of application, which has since been revised. As a result, 
the definition of application in Sec.  1002.2(f) no longer matches the 
quote in Sec.  701.31(a)(1). The technical amendment to Sec.  
701.31(a)(1) will update the definition.

II. Final Rule

    NCUA received thirteen comments on the proposed rule. Two comments 
were received from trade associations representing credit unions, seven 
from state credit union leagues, one from an FCU, and three from 
federally insured, state-chartered credit unions.
    All of the comments were supportive of the proposal. Commenters 
generally indicated that the proposed amendments will provide greater 
parity and consistency among federal financial regulations, eliminate 
redundancies, and benefit credit unions and their members by easing 
administrative and cost impediments to successful loan modifications. 
Several commenters, however, requested clarification of current 
regulatory requirements or offered comments beyond the scope of the 
June 2014 proposal.
    For example, two commenters suggested eliminating the current 
requirement that FCUs make available, to any requesting member, a copy 
of the appraisal used in connection with that member's application for 
a dwelling secured by a subordinate lien. The Board, however, proposed 
only to eliminate the portion of the current requirement in Sec.  
701.31(c)(5) relative to loans secured by a first lien on a dwelling 
because it is duplicative of Regulation B. The Board did not propose to 
eliminate those current protections provided under Sec.  701.31(c)(5) 
for FCU members regarding loans secured by subordinate liens because 
that portion of NCUA's regulations are not duplicative of Regulation B.
    As stated in the proposed rule, the consumer protections provided 
by NCUA's regulation and Regulation B do not overlap entirely. Under 
current Sec.  701.31(c)(5), FCUs are required under certain 
circumstances to provide copies of appraisals used in connection with 
an application for a real estate-related loan, which includes any loan 
to be secured by a first lien or a subordinate lien on a dwelling. The 
protections provided in Sec.  1002.14 of Regulation B extend to 
appraisals developed in connection with an application for a loan 
secured by a first lien on a dwelling. Despite this, the Board 
continues to believe the requirements of Sec.  701.31(c)(5) relating to 
appraisals used in connection with a loan secured by a subordinate lien 
on a dwelling must be retained as a consumer protection for FCU 
members.
    Several commenters asked for additional amendments to modify or 
clarify existing definitions or other current regulatory requirements. 
For example, one commenter requested clarification of the scope and 
meaning of the term ``dwelling'' in Sec.  701.31(a)(2)) of NCUA's 
regulations. The Board notes that the proposed rule did not modify any 
existing definitions or impose any new requirements on credit unions. 
All definitions in the current regulation have the same meaning under 
this final rule as they do under the current regulation. The Board also 
emphasizes that this final rule does not modify the 2010 Federal 
Financial Institutions Examination Council's interagency appraisal and 
evaluation guidelines and credit unions may continue to rely on that 
guidance.

[[Page 75748]]

    Accordingly, the Board is adopting the June 2014 proposed rule as 
final without change.

III. Regulatory Procedures

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \4\ requires NCUA to prepare 
an analysis to describe any significant economic impact a rule may have 
on a substantial number of small entities (defined for purposes of the 
RFA to include credit unions with assets less than $50 million).\5\ The 
amendments to parts 701 and 722 will only reduce regulatory impacts on 
credit unions by exempting them from certain regulatory requirements. 
Accordingly, the Board certifies the final rule will not have a 
significant economic impact on a substantial number of small credit 
unions.
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    \4\ 5 U.S.C. 601 et seq.
    \5\ 78 FR 4032 (Jan. 18, 2013).
---------------------------------------------------------------------------

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency by rule creates a new paperwork burden on regulated 
entities or increases an existing burden.\6\ For purposes of the PRA, a 
paperwork burden may take the form of a reporting or recordkeeping 
requirement, both referred to as information collections. This final 
rule would not impose or expand upon any existing reporting or 
recordkeeping requirements. Accordingly, this final rule would not 
create new paperwork burdens or increase any existing paperwork 
burdens.
---------------------------------------------------------------------------

    \6\ 44 U.S.C. 3507(d); 5 CFR part 1320.
---------------------------------------------------------------------------

C. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. 
NCUA, an independent regulatory agency, as defined in 44 U.S.C. 
3502(5), voluntarily complies with the executive order to adhere to 
fundamental federalism principles. The final rule would not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or the distribution of power 
and responsibilities among the various levels of government. NCUA has, 
therefore, determined that this final rule does not constitute a policy 
that has federalism implications for purposes of the executive order.

D. Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this final rule will not affect family 
well-being within the meaning of Sec.  654 of the Treasury and General 
Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 
(1998).

E. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 \7\ 
(SBREFA) provides generally for congressional review of agency rules. A 
reporting requirement is triggered in instances where NCUA issues a 
final rule as defined by Section 551 of the Administrative Procedure 
Act.\8\ NCUA does not believe this final rule is a ``major rule'' 
within the meaning of the relevant sections of SBREFA because it will 
only reduce regulatory burden on credit unions by exempting them from 
certain regulatory requirements. NCUA has submitted the rule to the 
Office of Management and Budget for its determination in that regard.
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    \7\ Public Law 104-121, 110 Stat. 857 (1996).
    \8\ 5 U.S.C. 551.
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List of Subjects

12 CFR Part 701

    Advertising, Aged, Civil rights, Credit, Credit unions, Fair 
housing, Individuals with disabilities, Insurance, Marital status 
discrimination, Mortgages, Religious discrimination, Reporting and 
recordkeeping requirements, Sex discrimination.

12 CFR Part 722

    Appraisals, Credit unions, Mortgages, Reporting and recordkeeping 
requirements.

    By the National Credit Union Administration Board on December 
11, 2014.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the NCUA Board amends 12 CFR parts 
701 and 722 as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 continues to read as follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 
701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also 
authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. 
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.


Sec.  701.31  [Amended]


0
2. Amend Sec.  701.31 as follows:
0
a. In paragraph (a)(1), remove the words ``, which is as follows:'' and 
remove the indented definition parenthetical ``An oral or written 
request for an extension of credit that is made in accordance with 
procedures established by a creditor for the type of credit 
requested''.
0
b. In paragraph (c)(5) in the first sentence, remove the words ``a copy 
of the appraisal used in connection with that member's real estate-
related loan application'' and add in their place the words ``a copy of 
the appraisal used in connection with that member's application for a 
loan to be secured by a subordinate lien on a dwelling'', and, in the 
second sentence, remove the words ``real estate-related loan 
application'' and add in their place the words ``application for a loan 
to be secured by a subordinate lien on a dwelling''.

PART 722--APPRAISALS

0
3. The authority citation for part 722 continues to read as follows:

    Authority: 12 U.S.C. 1766, 1789 and 3339.

Sec.  722.3  [Amended]

0
4. Amend Sec.  722.3 as follows:
0
a. In paragraph (a)(5) introductory text add the word ``lending'' 
before the words ``credit union'';
0
b. In paragraph (a)(5)(i) remove the word ``and'' and add in its place 
the word ``or''; and
0
c. In paragraph (a)(5)(ii) add the words ``, even with the advancement 
of new monies'' to the end of the paragraph.

[FR Doc. 2014-29635 Filed 12-18-14; 8:45 am]
BILLING CODE 7535-01-P