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.
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.
The appraisal disclosure is required as per §1002.14 (a) (2) of CFPB Regulation B. Read more about the Regulation B Appraisal Rules.
Appraisal Disclosure must be provided for the loans that loans that meet the requirements below.
The Appraisal Disclosure should contain the following information.
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.
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 However, if the loan was declined or was withdrawn before an appraisal was completed then you will not receive an appraisal report or other written valuations.
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.
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.
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.
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.
The Appraisal Disclosure can be provided to the applicant without regard to the applicant’s consent or other provisions of the E-Sign Act.
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.
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.
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:
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.
Updated: Jun 14, 2014