Strictly from a Reg. B appraisal notice perspective

Loan will be a 1st lien on a mixed use property --2 residential units and 1 commercial unit.

I believe we should give the notice, but I can't find anything in the regulation or the commentary to support my position.

Thoughts??

ECOA is NOT a consumer regulation only - it covers business purpose loans too.

From 1002.14(a)
(a) Providing appraisals and other valuations. (1) In general. 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.

ECOA Commentary
1. Coverage. Section 1002.14 covers applications for credit to be secured by a first lien on a dwelling, as that term is defined in § 1002.14(b)(2), whether the credit is for a business purpose (for example, a loan to start a business) or a consumer purpose (for example, a loan to purchase a home).

Reg. B's definition of dwelling::

"(2) Dwelling. The term "dwelling" means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home."

What I'm stuck on is the "residential structure" of this definition--part of this property is residential and part is commercial. That's why I'm looking for clarification.

thanks

Everything I have come across on this topic is that the CFPB, in informal responses to inquiries, has stated that the Reg B appraisal rule applies..that you would not used the mixed use test to exempt the property.

I did not inquire myself, but I would just give the disclosure and appraisal.

The cite to a "dwelling" 1002.14(b)(2) would appear to apply - and like KB mentioned mixed use appears in other regs - but not in ECOA.

thanks for confirming my thoughts

Appreciate it.

I have a similar question -- the lender has a borrower with a storage facility that has a residential unit where the manager lives. He's asking if this is a "dwelling" for purpose of the appraisal notice. I also looked at the definition of dwelling in Reg B and it not seeing where this becomes a residential dwelling. However I find myself second-guessing a lot these days and am asking to see if anyone would agree/disagree or may have had this scenario come up. I understand the comment about the regulation not having exemptions for mixed-use property, but not seeing that the storage facility is really a "mixed-use" property. Appreciate any other thoughts. Thank you.

I believe the storage facility with a residential unit would be a "dwelling" for Reg. B appraisal notice purposes. From 1002.14(b)(2):

(2) Dwelling. The term "dwelling" means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.

Note that it describes a residential "structure" and not residential "property" which to me, means that it looks to the building itself. This seems to be further reiterated in the use of the phrase "whether or not that structure is attached to real property."

If the storage facility didn't have the manager's unit, it would be a commercial "structure", and not subject to the Reg B appraisal requirements, but you are indicating that since the apartment is there it changes the entire structure to be residential? Struggling a bit with that --- I haven't seen the appraisal, but would the appraisal have to state that the storage facility is a residential structure? Thank you for helping me think this through, want to do the right thing.

For some reason I had a separate structure in my head, but I suppose if it is primarily a commercial structure that contains a residential unit, logically it would not meet Reg. B's definition of a 1-4. Personally, that is the explanation I would provide if questioned on it.

But if the building is mixed use, didn't we decide that Reg B has no exceptions for mixed use? If not. then there is a dwelling, someone lives there, shouldn't we give the Appraisal Notice?

See discussion above.