CFPB Adopts Rules to Improve Consumer Access to Appraisal Reports
by: Lee Greenberg, Esq.
On January 18, 2013, the Consumer Financial Protection Bureau (CFPB) adopted two rules with the intention of improving consumer access to appraisal reports. Both rules become effective on January, 18 2014.
The first new rule adopted by the CFPB requires mortgage lenders to provide applicants with free copies of all appraisals and home-value estimates prior to closing. Under the rule, creditors must inform consumers of their right to receive a copy of all appraisals within three days of receiving an application.
The rule also requires creditors to provide consumers with copies of appraisal reports and other home-value estimates promptly upon completion, or three days before closing. Further, the rule prohibits creditors from charging for copies of appraisals and other written valuations, but permits creditors to charge applicants reasonable fees for the cost of such reports.
The second new rule establishes special requirements concerning appraisals for higher-priced mortgage loans. Under the second rule, creditors must use a licensed or certified appraiser to prepare written appraisal reports following the appraiser’s physical inspection of the interior of the property.
In addition, creditors are required to disclose the purpose of the appraisal to applicants as well as provide consumers with a free copy of any appraisal. Finally, the rule requires creditors to obtain a second appraisal at no cost to the consumer if a seller acquired the appraised property for a lower price during the prior six months and the price difference exceeds certain thresholds. The second rule only applies to closed-end credit transactions. Qualified mortgages and certain reverse mortgages are exempt from the second rule.
About the Author:
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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