We provided notice of right to receive copy of appraisal. We denied the loan based on insufficient income and equity, based on customer's perceived value of property. Customer requests copy of appraisal.

What do I do? I have nothing to send them.

I am not being a smart-aleck, but I am intrigued. Do you always rely on a customer's perceived value of a property to base the loan decision?

How did you determine the value?

If a loan is not going to qualify, we don't bother spending money on searches and appraisals. This was going to be denied for both LTV (customers rarely underestimate the value of their home, at least in this geographic region), and debt/income.

I say this in a noce way , then you probably should not have declined it for Loan to Value. JMO

Either way, we would have denied it, and they would have had the right to receive a copy of the appraisal. Either way, we don't have an appraisal. What do I do? Ignore their request? Write them a letter?

They only have right to receive a copy if you actually looked at the value of the home. Even if the tax assessment was used, you could provide them with the document used to calculate the value. I think you need to explain that you did not obtain an appraisal however the loan was declined due to debt to income.

Did your AAN state the fact the lack of equity was based on the applicant's estimation?

Simply inform them you based the decision on their estimation and a formal external/internal appraisal was not performed.

Quote:

---

They only have right to receive a copy if you actually looked at the value of the home

---

I was under the impression we had to notify all applicants of right to receive copy of appraisal if the requested loan was secured by residential real estate. Do you have a cite that states otherwise?

You'll have to look to Reg B's 202.14 and it's Official Staff Interpretations.

We routinely provide a copy, therefore we do not have to give the notice.

(a) Providing appraisals. A creditor shall provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling.

If you don't use an appraisal, how do you provide one?

If your applicant is persistent, you can always provide a copy of the document where they estimated the value.

HOWEVER, if you used any internal worksheets to establish a value, then you probably have an appraisal as defined under Reg B and would need to provide a copy of the worksheets.

Thanks for the help guys. I can't wait for the customer to call me back to tell her she has a right to receive a copy of the appraisal, but since there is not appraisal, she has a right to receive a copy of nothing. Sort of like multiplying by zero I guess. A copy of nothing is still nothing.

I recommend you make it easy on yourself and either:
a) tell them on the phone there is nothing, or
b) tell them to come all the way to the bank to wait for the lender {insert name} (slowest to correct compliance violations) and to ask him/her for the appraisal documents applicable.

Well, I called him/her and he/she had a sense of humor about the whole thing, but talk about the government putting me in an awkward position. Make me provide a right to receive copy of non-existent appraisal and then explain it to the customer. Thanks for everyone's suggestions.