A new NCUA rule change encourages federally insured credit unions to modify or refinance real estate loans they hold in areas where home prices have declined, according to NCUA’s December 2014 Board Action Bulletin.
Under the rule, a federally insured credit union can modify or refinance a real estate loan without a new appraisal if no new monies are advanced, or if a new advance carries adequate collateral protection.
“This new appraisal exemption for loan modifications and refinancing will provide relief to borrowers who are underwater in their mortgages through no fault of their own,” says NCUA Board Chairman Debbie Matz.
“We want to keep members in their homes,” Matz says. “We want to cut unnecessary paperwork. And we want to encourage credit unions to modify or refinance mortgages in markets where home values have fallen. This final rule does exactly that.”
NCUA made the change in December when finalizing amendments to its appraisal regulations (Parts 701 and 722) as part of the agency’s Regulatory Modernization Initiative.
Specifically, the final rule: