Right To Receive Copy Of Appraisal Report
What is a Right to Receive Copy of Appraisal Report?
Right to Receive Copy of Appraisal Report is a disclosure informing loan applicants of their right to receive a copy of the appraisal report that was used in connection with an application of a loan secured by a residential property. Residential property includes any residential structure that contains one to four units whether or not that structure is attached to real property. This includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.
The requirement for sending this disclosure is specified in §1002.14 of Regulation B. Under Regulation B, the lender has a choice to either send:
- Copies of appraisals upon request and notify them of their right to make a request, or
- Routinely provide a copy of the appraisal report to the loan applicants.
ECOA Valuations Rule Effective Jan 18, 2014
On January 18, 2013 CFPB amended the Regulation B rules. The new rules will be effective for applications received on or after January 18, 2014. Under the new rules, the lender will be required to send both:
- Right to Receive Copy of Appraisal Report Disclosure: Disclose to applicants that they have the right to receive copies of appraisals and written valuations.
- Copy of Appraisals: Automatically send a free copy of home appraisals and other written valuations promptly after they are completed, regardless of whether credit is extended, denied, incomplete, or withdrawn.
While the current rules give the lender a choice in implementing either of the two above, the new rules will require the lender to send both.
Another key change will require a lender to send the Right to Receive Copy of Appraisal Report disclosure within 3 days from date of application. The current rules allow the lender to send this disclosure no later than date of action taken.
Contents of Right to Receive Copy of Appraisal Report
The disclosure document contains the following:
- Notice of the right of the applicant to receive a copy of an appraisal report.
- Requirement that the applicant's request must be in writing.
- The lender's mailing address where the request can be made.
- The requirement that the lender is required to send a copy of the appraisal report only if the applicant's request is received no more than 90 days after the lender has provided notice of action taken on the application under §1002.9 of Regulation B or 90 days after the application is withdrawn.
Requesting the Appraisal Report
You may want to take advantage of obtaining a copy of the appraisal report from the lender. Make your request in writing at the address provided in the disclosure. Remember you have only 90 days from the date you receive the notice to send your request.
The requirement to either provide the appraisal report or the Right to Receive Copy of Appraisal Report disclosure applies to any type loan that is secured by a residential property. This includes both commercial purpose loans and consumer purpose loans. This requirement also applies when an applicant requests the renewal of an existing loan and you obtain a new appraisal report. However, it does not apply when you use an appraisal report you previously obtained to evaluate the renewal request.
Whom to Send
If there are more than one loan applicants then the disclosure or the appraisal report can be given to only one applicant, but it must be given to the primary applicant where one is readily apparent. Generally, your loan officer or the processor would be responsible to send the disclosure.
The disclosure should be sent in writing.
When to Send
Per Regulation B, the disclosure must be given at any time during the application stage as long as it no later than when you provide a notice of action taken. Therefore, depending upon the action taken, the following may apply:
- Approved Loans: At the latest, include the disclosure along with the Approval/Commitment Letter. If the approval is communicated verbally, then the document must be set prior to the verbal communication of approval.
- Denied Loans: At the latest, include the disclosure in the denial letter.
- Notice of Incompleteness: At the latest, include the disclosure in the Notice of Incompleteness. This recommendation is based on interpretation of Regulation B notification rules. Notice of Incompleteness may contain a statement that if the applicant fails to provide the information requested, then you may no longer consider the loan application. In this case, you are not required to send decline notice if the applicant fails to respond within the time period specified in Notice of Incompleteness. Therefore, Notice of Incompleteness may be the last communication of action taken and it is prudent to include the Right to Receive Copy of Appraisal Report disclosure along with the Notice of Incompleteness.
- Cancelled Loans: At the latest, include the disclosure in the cancellation letter.
As mentioned above, the ECOA Valuations Rule will change the timing requirements whereby you will be required to send the disclosure within 3 days from the date of application.
We recommended that you include this disclosure along with the early disclosures/three day disclosure (GFE, TIL, etc.). This will simplify the process. However, the only risk here is that you may decline a loan within three days from the date of completed application and you may not send the early TILA and RESPA disclosures. In this case, you have to remember to still send the Right to Receive Copy of Appraisal Report disclosure. Regulation B requirements still apply, irrespective of whether or not the RESPA or TILA disclosures apply.
To inform the loan applicants of their right to receive a copy of the appraisal report that was used in connection with their application of a mortgage loan.
Use in Mortgages
To inform the applicant of their right to receive a copy of the appraisal report and the time within which to make the request for the appraisal.
Life Cycle Stage
We recommend retaining a copy of the disclosure that was sent to the borrower in the loan file for as long as the loan file is maintained. For cancelled, withdrawn, or denied applications, retain a copy of the appraisal for at least 25 months from date of notifying an applicant of action taken.
CFPB Regulation B, 12 CFR §1002.14