Compliance Blog

Written By JiJi Bahhur, Regulatory Compliance Counsel

Last Wednesday, the Consumer Financial Protection Bureau (CFPB) released a proposed rule that would amend the Equal Credit Opportunity Act (ECOA)’s Regulation B by requiring mortgage lenders to provide home loan applicants with copies of written appraisals and other home value estimates developed in connection with the application. The rule would ensure that consumers receive information prior to closing about how the property’s value was determined.

Under the proposal, consumers would receive disclosures of their right to receive a free copy of appraisal reports and home value estimates within three days of applying for a loan. Creditors would then be required to provide the reports to consumers as promptly as possible, but in no case later than three days before closing, regardless of whether credit is extended, denied, incomplete or withdrawn.

Also under the proposal, creditors could still charge reasonable fees associated with conducting appraisals and home value estimates.  However, the rule prohibits creditors from charging consumer fees for obtaining the reports.  This is a change from current practices where consumers must request an appraisal report from the creditor and may be charged a fee to obtain the report.   

The CFPB plans to finalize this rule in January 2013.  For more details on the proposal, you can view the proposal here and a summary of the CFPB’s proposal here. 

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Importantly, the CFPB's proposal would remove the long-standing exemption from the appraisal requirements in Regulation B - 12 CFR 1002.14:

"(b) Credit unions. A creditor 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."

Federal credit unions have historically been able to follow 12 CFR 701.31(c)(5) of NCUA's regulations but the CFPB's proposal would force CUs to comply with Regulation B for appraisals - including the new requirements.