CFPB Proposes New Rules for Property Appraisals
by Anna DeSimone
President
Monday, October 15, 2012 marks the end of the sixty-day comment period of the proposed rules issued by the Consumer Financial Protection Bureau (CFPB) that would give consumers additional information rights regarding their property appraisals. The CFPB expects to implement the final rule in January 2013.
The rule would require mortgage lenders to provide home loan applicants with copies of written appraisals and other home value estimates and ensure that consumers receive information prior to closing about how the property’s value was determined.
Creditors will be required to inform consumers within three days of applying for a loan of their right to receive a free copy of the appraisal reports and home value estimates. Creditors must furnish the reports as promptly as possible, but in no case later than three days before closing. The rule applies to all loans regardless of whether credit is extended, denied, incomplete or withdrawn.
Under the proposed rule, creditors could still charge reasonable fees associated with conducting appraisals and home value estimates; however, the rule would prohibit creditors from charging consumers fees for obtaining the reports.
The proposed rule would amend the Equal Credit Opportunity Act (ECOA)’s Regulation B, which require certain disclosures and prohibits lenders from discriminating on the basis of race, national origin, sex, or other protected bases. Under the Dodd-Frank Act, the Bureau is authorized to issue regulations implementing ECOA and supervise compliance with ECOA and Regulation B for certain lenders.
Following is a summary of the proposed rule:
* Limit the requirement to applications for credit to be secured by a first lien on a dwelling.
* Require that creditors notify applicants within three business days of receiving an application of their right to receive a copy of written appraisals and valuations developed in connection with their application.
* Require that creditors provide applicants a copy of all written appraisals and valuations promptly after receiving them, but in no case later than three business days prior to closing on the mortgage.
* Permit applicants to waive the timing requirement to receive copies three days prior to consummation, provided a copy of all written appraisals and valuations is provided at or prior to closing.
* Prohibit creditors from charging additional fees for providing a copy of written appraisals and valuations, but permit creditors to charge applicants a reasonable fee to reimburse the creditor for the cost of the appraisal or valuation unless otherwise provided by law.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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