Reg B appraisal rules are designed to ensure that lenders provide accurate and unbiased appraisals, which is crucial for making informed lending decisions.
Lenders must comply with Reg B appraisal rules, which require them to use appraisers who are independent and impartial.
Appraisers must also follow a specific appraisal process, which includes inspecting the property, gathering data, and analyzing the information to determine the property's value.
According to Reg B, lenders must obtain an appraisal from a qualified appraiser within 30 days of receiving a mortgage application.
Reg B Appraisal Rules
You're required to notify applicants of their right to receive a copy of an appraisal within three business days of receiving a covered application or learning an application will be secured by a first lien on a 1-4 family dwelling.
This notification must be done promptly, and you'll need to provide the free copy to the applicant as well. A creditor shall provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling.
The appraisal report must be provided within 30 days after the creditor receives an applicant's request, receives the report, or receives reimbursement from the applicant for the report, whichever is last to occur.
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12 CFR § 1002.14 Details
A creditor must provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling.
The creditor has two options for providing the appraisal report: they can either routinely provide a copy to the applicant or provide a copy upon the applicant's written request.
If a creditor does not routinely provide appraisal reports, they must notify the applicant in writing of their right to receive a copy of the appraisal report.
The notice must specify that the applicant's request must be in writing, give the creditor's mailing address, and state the time for making the request as provided in paragraph (a)(2)(ii) of this section.
A creditor must mail or deliver a copy of the appraisal report promptly, generally within 30 days, after receiving the applicant's request, receiving the report, or receiving reimbursement from the applicant for the report, whichever is last to occur.
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The creditor need not provide a copy when the applicant's request is received more than 90 days after the creditor has provided notice of action taken on the application under § 202.9 of this regulation or 90 days after the application is withdrawn.
Here's a summary of the key details:
- Option 1: Routine delivery of appraisal reports to applicants
- Option 2: Providing appraisal reports upon applicant's written request
- Notice requirements for creditors that do not routinely provide appraisal reports
- Timeframe for delivering appraisal reports (generally within 30 days)
- Exceptions for providing appraisal reports (requests received more than 90 days after notice of action taken or application withdrawal)
Multiple Structures
When dealing with multiple structures, the Reg B appraisal rules require a separate appraisal report for each structure. This applies even if the structures are on the same property.
A good example is a property with a single-family dwelling and a separate garage or guest house. In this case, you would need to provide a separate appraisal report for each structure.
Reporting Requirements
A creditor shall provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling.
You can receive a copy of the appraisal report either routinely or upon request. If a creditor routinely provides appraisal reports, they must give you a copy whether credit is granted or denied or the application is withdrawn.
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A creditor that does not routinely provide appraisal reports must provide a copy upon your written request. They must notify you in writing of your right to receive a copy of the appraisal report.
The notice can be given at any time during the application process but no later than when the creditor provides notice of action taken under § 202.9 of this regulation. The notice must specify that your request must be in writing, give the creditor's mailing address, and state the time for making the request.
A creditor must mail or deliver a copy of the appraisal report promptly, generally within 30 days, after receiving your request, receiving the report, or receiving reimbursement from you for the report.
The creditor need not provide a copy when your request is received more than 90 days after they have provided notice of action taken on the application under § 202.9 of this regulation or 90 days after the application is withdrawn.
A credit union that is subject to the regulations of the National Credit Union Administration on making copies of appraisal reports available is not subject to this section.
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Frequently Asked Questions
What is the ECOA 3 day appraisal rule?
The ECOA 3 day appraisal rule requires lenders to notify borrowers within 3 days of application about their right to receive a copy of the appraisal or valuation report. This notification is a key part of the ECOA Valuations Rule, ensuring borrowers are informed about their appraisal options.
What is the most common Reg B violation?
The most common Reg B violation is discrimination on a prohibited basis in a credit transaction. Reviewing this common violation can help financial institutions identify potential gaps in their Fair Lending compliance management systems.
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