Mortgages Analyzed
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Appraisal Disclosure

What is Appraisal Disclosure?

Appraisal Disclosure

Appraisal Disclosure is a notice in writing of the applicant's right to receive a copy of appraisal report or any other written valuation developed in connection with a loan application that is secured by a first lien on a one to four unit residential property. The disclosure is for informational purposes and makes the applicants aware that they will receive a copy of the appraisal or any other written valuation developed in connection with the application for a mortgage loan secured a dwelling. Dwelling is defined as a one-four unit residential property.

The disclosure replaces the previously used Right To Receive Copy Of Appraisal Report.

Effective Date

The lender is required to send the Appraisal Disclosure for any mortgage loan application received on or after January 18, 2014. Applications that were in progress prior to Jan 18, 2014 do not have to send this disclosure.

Implementing Regulation

The appraisal disclosure is required as per §1002.14 (a) (2) of CFPB Regulation B. Read more about the Regulation B Appraisal Rules.

Source :www.MortgagesAnalyzed.com

Applicability

Appraisal Disclosure must be provided for the loans that loans that meet the requirements below.

  1. First Lien loans.
  2. Loan secured by dwelling. Dwelling is defined as one to four unit residential structure, whether or not that structure is attached to real property. It includes single family residences, individual condominium or cooperative unit, a mobile home, or manufactured home.
  3. The loan may be for any purpose. It includes purchase or refinance and commercial and consumer purpose loans.
  4. Applies to both open end and closed end credit. Therefore, in addition to mortgage loans, first lien Home Equity Lines of Credit (HELOC) and first lien Home Equity Loans (HEL) are covered.
  5. Occupancy does not matter. The rules apply irrespective of whether the property is owner occupied or investment property.
  6. The rules apply to renewals if new appraisal or other written valuation is being developed in connection with the renewal application. The rules do not apply if the lender is relying on appraisal or other written valuations that were previously developed for the loan.
  7. Loan modification and other loss mitigation transactions, as long as they are considered as extensions of credit under Regulation B.
  8. Reverse mortgages.
  9. Time share loans, if they are considered as extensions of credit under Regulation B.
Source :www.MortgagesAnalyzed.com

Contents of Appraisal Disclosure

The Appraisal Disclosure should contain the following information.

  1. Date Prepared. The date when the disclosure was generated.
  2. Application Number
  3. Applicant(s) Name
  4. Lender Name
  5. Lender Address
  6. Subject Property
  7. Disclosure of consumer’s right to appraisal using the model language provided Form C-9—Sample Disclosure of Right To Receive a Copy of Appraisal that is contained within CFPB Regulation B, Appendix C to Part 1002—Sample Notification Forms. The model language is reproduced below:
    We may order an appraisal to determine the property's value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close.
    You can pay for an additional appraisal for your own use at your own cost.
Source :www.MortgagesAnalyzed.com

Borrower’s Consideration

Informational Only

Appraisal disclosure is informational only and you do not need to take an action. It basically informs you that the lender will be providing you with a copy of the appraisal or other written valuation that was developed for your loan application.

Will You Always Receive an Appraisal?

You will receive an appraisal report or other written validations if they were developed for your loan application. As long as an appraisal was developed, you will also receive the appraisal if your application is declined or if you withdrew your loan application. However, if the loan was declined or was withdrawn before an appraisal was completed then you will not receive an appraisal report or other written valuations.

Source :www.MortgagesAnalyzed.com

Lender’s Considerations

Multiple applicants

If there is more than one applicant, the disclosure need only be given to one applicant. However, it must be given to the primary applicant where one is readily apparent.

When to Send the Appraisal Disclosure

You must mail or deliver the disclosure to an applicant, not later than the third business day after you receive an application for a mortgage loan that is to be secured by a first lien on a dwelling. You do not need an acknowledgement or confirmation from the applicant that they have received the disclosure. However, your records or systems should have information that can be used to demonstrate that the disclosure was provided in a timely manner.

If the application was not for a first lien on a dwelling, but later becomes a loan secured by first lien on a dwelling, then you must mail or deliver the appraisal disclosure no later than the third business day after you determine that the loan will be secured by first lien on a dwelling. Therefore, any time during the application if the collateral is changed to a dwelling having a first lien position, then you must send the appraisal disclosure within three business days.

Source :www.MortgagesAnalyzed.com

Form and Format of the Appraisal Disclosure

Form

The disclosure must be made in writing. The content of the disclosure can be found in the model form Form C-9—Sample Disclosure of Right To Receive a Copy of Appraisals. The model form is located in Appendix C - Sample Notification Forms of CFPB Regulation B.

Format

You must provide the disclosures in a clear and conspicuous manner and in a form the applicant may retain. Based on this requirement, the disclosure should be provided in a separate page that can be retained by the applicant. Do not include it with a loan application form or any other document that is returned back you.

E-Sign

The Appraisal Disclosure can be provided to the applicant without regard to the applicant’s consent or other provisions of the E-Sign Act.

Source :www.MortgagesAnalyzed.com

Cancelled, Denied, Withdrawn, and Incomplete Applications

You must send the Appraisal Disclosure within three business days of receipt of application irrespective of the application status. Nothing in the regulation states that you not need to send the disclosure if application is cancelled, denied, withdrawn, or is incomplete within the three business days from the date of application. Additionally, as long as an appraisal was completed for the loan application, you are required to send the copy of appraisal or written valuation even if the loan is cancelled, denied, withdrawn, or incomplete.

Applications for Loan Renewal

For an application for a loan renewal, the disclosure must be provided if you intend to obtain a new appraisal report or develop a written valuation of the property. You do not need to send the appraisal if you are going to rely on appraisals or valuations previously developed in connection with the prior loan to evaluate the renewal request.

Including the Disclosure in the 3-Day Disclosure Packet

You may include the Appraisal Disclosure as part of the 3-Day package that includes RESPA and TILA disclosures. However, you should keep the following in mind as you configure your loan origination systems:

  1. First Liens Only: The Appraisal Disclosure applies to first liens only. If you are also sending a 3-day disclosure for the subordinate liens then you must remember to remove the disclosure from the packet. On the other hand, if you are offering first lien HELOCs, then you must set up your process to provide the disclosure.
  2. Withdrawn or Decline in 3 Days: If the loan is declined, cancelled, or withdrawn within three days from the date of application, then certain RESPA and TILA disclosures may not apply and your system may be suppressing the delivery of the 3-day disclosures. The risk is that you may fail to send the Appraisal Disclosure that was included with the other disclosures. However, the Appraisal Disclosure still needs to be sent out and you must ensure that the system is correctly configured.

Recordkeeping

As a best practice, you should retain a copy of the disclosure that was sent to the borrower in the loan file for as long as the loan is open. However, to demonstrate compliance for Regulation B, you should retain a copy of the disclosure and the proof of its delivery for at least 25 months from date of notifying an applicant of action taken. For business loans, Regulation B retention period is 12 months from the date of notifying an applicant of action taken.

Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Appraisal Disclosure
Purpose
Appraisal Disclosure is a notice in writing of the applicant's right to receive a copy of appraisal report or any other written valuation developed in connection with a loan application that is secured by a first lien on a one to four unit residential property.
Use in Mortgages
The disclosure is for informational purpose only and informs the applicant that he/she will receive a copy of the appraisal or any other written valuation.
Other Names
None
Type
Disclosure
Provided By
Lender (Loan Originator)
Provided To
Applicant
Notarization Required
No
Signed By
None
Life Cycle Stage
Origination
Recordkeeping
For consumer loans, retain for at least 25 months from date of notifying an applicant of action taken.
Model Form
CFPB Regulation B, Appendix C to Part 1002—Sample Notification Forms
Form C-9—Sample Disclosure of Right To Receive a Copy of Appraisals
Applicable Laws
CFPB Regulation B, 12 CFR 1002.14 (a) (2)
 

Updated: Jun 14, 2014

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Appraisal Disclosure is a notice in writing of the applicant's right to receive a copy of appraisal report
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