AFSA-CMC Comment on ECOA Appraisal Rule

 

Background and Proposal

The proposal would implement section 1474 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”), which amended the Equal Credit Opportunity Act (“ECOA”). This amendment will require creditors to furnish applicants for loans secured by a first lien on a dwelling a copy of any estimate of the property value developed in connection with the creditor’s credit decision. It requires creditors to notify applicants, at the time of application, of their right to receive the valuations. It also requires creditors to deliver the valuations “promptly upon completion,” and no later than three days before closing, although consumers can waive the three-day waiting period. Creditors will be required to deliver the valuations even if the loan never closes. Creditors are permitted to charge fees for written valuations unless otherwise prohibited.

The CFPB proposes to define valuations to include “any estimate of the value of a dwelling developed in connection with a creditor’s decision to provide credit.”1 The proposed Commentary provides several examples of what is included.

The proposal would require the initial disclosure of the right to receive property valuations within three business days of a loan application.2 It would require delivery ofthe valuations “promptly[,]” which is generally within 30 days of receipt; the creditor would be required to deliver the valuations no later than three business days before closing, although consumers can waive the three-day waiting period.