Just when I think I have things figured out, I start second-guessing myself. After attending a seminar, we had decided that we fit the exemption for small creditor so the Reg B. Appraisal rules didn't apply. But.....I started reading again and there is the exemption for Small Creditor QMs but NOT for balloon-payment QMs. So as a small creditor, if we do a balloon-payment QM does that mean it is not exempt?

Regulation B appraisal rules don't have a small creditor exemption.

There is a temp 2 yr exemption for small creditors (even if not rural underserved sm creditor) that allows balloon QMs if they are held in portfolio.

My bad, it was the end of the day and I have been sick and on medication. The Reg B timing isn't the one bothering us. It's the requirement for having a physical inspection of the interior. We have an appraiser that just makes the drive-by evaluation with picture but the small creditor QM portfolio loan is exempt but is says the balloop-payment QM is not. So if we do a balloon-payment loan we would have to do an interior inspections also?

The interior inspection requirement is for HPMLs.

And no exemption if you meet the small creditor requirements - but on balloon payment loans only, right? If it's not a balloon payment we are exempt?

There is no sm creditor exemption for the appraisal rules. If the ln is an HPML, you have to inspect the interior. However, if the loan is a QM, it is exempt from HPML appraisal rules, but not Reg B appraisal rules.

HPMLs that are QMs under 1026.43(e) are exempt from the HPML appraisal requirement. That includes a regular QM under (e)(2), a transitional QM under (e)(4), a small-creditor portfolio QM under (e)(5) or a temporary small-credit balloon QM under (e)(6). But it does not include a small-creditor balloon QM under .43(f), which is the only balloon-payment QM that will be available after January 2016 (unless that deadline is extended).

As noted above, there is no exemption from the Reg B appraisal copy and notice requirement for first-lien loans.

thanks, John. That's how I was reading it but all these changes and exemptions are getting me confused.

No one said this stuff is easy to wade through. I'm fortunate enough (?!) to be able to devote a few hours every weekday to it. Working banks don't have that luxury.

On the subject of exemptions - I see that the ATR rules give "broad" exemption for temporary or bridge loans but the HPML Appraisal rules more narrowly/specifically exempt only bridge loans.

Am I correct that a temporary interest only loan or equity draw down line of credit (non-HELOC) would have to comply with the certified appraisal w/ interior inspection requirement if it is also an HPML? (consumer purpose, principal dwelling)

That's the way I read it.

Just to keep the inconsistency going, the HPML Escrow rule goes back to the broader exclusion of all temporary loans less than or equial to 12 months.

Has there been any final word on the proposed exemptions for HPML appraisal rules issued in July?

The proposed exemptions were; transactions secured by existing manuf homes and not land...certain "streamlined" refinancings...and transactions of less than 25k.

Nothing yet. This proposal was from an interagency group; such things take longer to get finalized. I don't know whether there's any additional delay due to the funding hiatus in Washington.