Sorry to rehash, maybe I'm making this too difficult. We are making a loan secured by 19 individual condo units located in a development with 84 total units. The appraisal was obviously done as a commercial appraisal, but I'm missing in the reg where that in itself excludes it? Do the delivery rules apply?

The type appraisal utilized has no bearing on the notice requirement. The loan being secured by a 1-4 dwelling is the triggering factor.

That is my thought as well. So would your opinion be that this transaction would be covered by Reg B? The pushback that I am receiving is that the 19 units would not meet the definition of a dwelling.

But EACH of the 19 units is a dwelling. They are not assembled into 3 buildings that would constitute a "complex" are they?

Read thru that section where Footnote 79 is. If you have individual units....reg applies. If you have 5+ units in a complex...doesn't. Reg B, in general, touches commercial, too.

The pushback that I am receiving is that the 19 units would not meet the definition of a dwelling.

What are they, barns? On what basis are the loan officers stating their opinions that each individual unit isn't a dwelling?

Here's the footnote Cornfed was referring to:

79 With respect to the example raised by a creditor
and two national creditor associations—three four unit
buildings operated as a 12-unit apartment
complex, the text of the rule makes clear that a four unit
residential building would be a dwelling, but
a 12-unit apartment complex is not. Thus a
transaction secured by a four-unit residential
building would be covered by the rule, but a
transaction secured by the entire 12-unit apartment
complex would not be. Because this question can
be analyzed in a straight forward manner by
reference to the text of the rule, the Bureau does not
believe that further commentary is needed for this
to be apparent. Similarly, the definition of
‘‘dwelling’’ refers to the example of an ‘‘individual
condominium or cooperative unit,’’ but not to a
cooperative building as a whole, even though such
a building may contain several individual units.

The 19 units we are taking are part of a larger development with a total of 84 units. The 84 units are contained in 3 - 3 story buildings.

Thanks so much for the feedback!

Do not confuse individual condo units with an apartment complex. You have 19 individual 1-4 family units as your collateral regardless of the size and shape of the building or buildings they may be in and the appraisal rules will apply.

Thanks, rlcarey! That was my take as well, however...

We made a call to the FDIC. The examiner we spoke with indicated it would not be covered because in his opinion the regulation is written in the singular, and in this scenario there are multiple condos. (What???) We then turned turned it around and asked if that meant a loan secured by multiple rental houses would not be covered, and we got silence... He was going to continue researching.

That being what it is, we documented the file with a memo of our conversation with the examiner, and moved on without the appraisal delivery requirements.

in his opinion

There in lies the issue.

I am guessing that the Bureau has heard that question hundreds of times since the final rule was issued. Short-range historians of the Threads may recall allusions to an ABA/CFPB Q&A that touched on the question, but there's nothing official out on it that I am aware of. According to one source, the Bureau is referring all the way back to when the old Reg B appraisal copy rule was issued by the Fed. I am hoping this is one of the first items on the agenda for the upcoming Bureau webinar on industry FAQs on the "January 2014 rules."

Using the "singular" verbiage for a dwelling, we have differing opinions on whether the appraisal notifications would be required at application on "bridge loans" made to individuals to purchase a new personal residence where the loan will be secured by a 1st lien on the home being purchased and also be secured by either a 1st or 2nd lien on their current residence (depending on whether the current house is owned free and clear).

Since two dwellings will be securing the note, do we need to provide the appraisal notices on both properties, just the one being purchased that will have a 1st lien, or neither since there is more than one dwelling securing the loan?

The notice goes to the applicants. Multiple buildings do not multiply them.

This might answer my question on another thread. Sounds like no formal/official exemption was ever given on loans to developers secured by multiple dwellings. Do you agree that Lines of Credit might have different appraisal provision requirements when it comes to draws of amounts previously approved because no "application" exists?

Not addressed in the regulation. Future collateral added to an existing credit obligation is just not addressed.

Thank you for the input, it is much appreciated as always. I feel like it is implied in the definition of application under Reg. B.

"Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit."

So, as the requirement for providing valuations is tied to an application under 1002.14(a)(1), "A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling," I would understand it to mean that this is not necessary for situations where an existing line is used to purchase a dwelling, as no application took place. The appraisal would not be developed in connection with an application for credit.

But, I agree it is not specifically addressed.