New Federal Guidelines Require Creditors to Provide Free Copies of Appraisals and Other Written Valuations
In January 2014, the Consumer Financial Protection Bureau (CFPB) implemented its final rule requiring creditors to provide applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling. The rule amended Regulation B, which implements the Equal Credit Opportunity Act, to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Prior to the new rule, creditors would provide copies of appraisals only upon an applicant’s request. Now creditors must notify the applicants within three business days of receiving an application about their right to receive a copy of the valuation reports developed. Creditors must then provide free copies of all valuation reports promptly upon completion. Even if an applicant waives the timing requirement to receive the valuation reports, the creditor must still provide copies of the reports whether or not the transaction is extended, denied, incomplete or withdrawn. Valuation reports could include appraisals, Automated Valuation Models (AVMs), Broker Price Opinions (BPOs) or other documents prepared by creditor staff that assigns a value to the property.
The CFPB has written a compliance guide to help creditors understand and implement the new rule and also offers a guide for consumers on federal rules that affect the mortgage application process: