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#2026091 - 07/08/15 09:50 PM Appraisal Required for Commercial Loans
kmenard Offline
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I understand that the Appraisal Notice and a copy of an appraisal is required if the loan is to a business secured by the owners home or a rental house, the question that is coming up is if the notice and a copy of the appraisal is required if the loan is to build a 1-4 dwelling or to "develop" an area. Currently we make a loan to a builder secured by the lot and house to be built, it is one loan and one piece of collateral. The customer may have one loan or several loans at one time. Each loan is secured by the dwelling being built, nothing is crossed collateralized. Is this customer exempt from Reg B appraisal disclosure or should they receive the disclosure and a copy of the appraisal?

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Interagency (Reg Z) and CFPB Reg B Appraisal Rules
#2026101 - 07/08/15 09:59 PM Re: Appraisal Required for Commercial Loans kmenard
rlcarey Offline
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No. 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.

Sounds like your loans meet the criteria. It is pretty straight forward.
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#2026161 - 07/09/15 01:47 PM Re: Appraisal Required for Commercial Loans kmenard
Dan Persfull Offline
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I agree with Randy. Business purpose loans are not exempt from Reg. B requirements. From the Commentary to 1002.1.


1(a) Authority and scope.

1. Scope. The Equal Credit Opportunity Act and Regulation B apply to all credit—commercial as well as personal—without regard to the nature or type of the credit or the creditor, except for an entity excluded from coverage of this part (but not the Act) by section 1029 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5519). . . . . . .
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#2026167 - 07/09/15 02:07 PM Re: Appraisal Required for Commercial Loans kmenard
kmenard Offline
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Thanks for the information. One more question, if the customer is a developer and we do a "master" note that will be secured by all the dwellings he is building, would this be exempt from the notice and copy of the appraisal requirements?

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#2026172 - 07/09/15 02:21 PM Re: Appraisal Required for Commercial Loans kmenard
Skittles Offline
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If the dwellings are 1-4 family residences then the answer is 'no'.
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#2065934 - 02/25/16 12:53 AM Re: Appraisal Required for Commercial Loans Skittles
Snowgirl Offline
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If the loan is secured by a farm that includes their dwelling, is the disclosure required?

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#2065949 - 02/25/16 12:54 PM Re: Appraisal Required for Commercial Loans kmenard
rlcarey Offline
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Yes.
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#2065960 - 02/25/16 01:37 PM Re: Appraisal Required for Commercial Loans kmenard
John Burnett Offline
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Originally Posted By kmenard
Thanks for the information. One more question, if the customer is a developer and we do a "master" note that will be secured by all the dwellings he is building, would this be exempt from the notice and copy of the appraisal requirements?


No. See footnote 79 in the Federal Register document publishing the rule: http://www.federalregister.gov/a/2013-01384/p-245

The 1002.14 requirement uses the language "secured by first lien on a dwelling" (see 1002.14(a)), If the security interest for the loan is multiple dwellings, the rule does not apply.
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#2069988 - 03/18/16 05:56 PM Re: Appraisal Required for Commercial Loans kmenard
j2rocket Offline
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Is an appraisal notice needed if the lender is taking a first lien on a 1-4 family dwelling but the collateral is being taken as abundance of caution and no appraisal is ordered or required?

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#2070097 - 03/19/16 02:55 PM Re: Appraisal Required for Commercial Loans kmenard
rlcarey Offline
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Yes.
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#2075426 - 04/25/16 02:49 PM Re: Appraisal Required for Commercial Loans kmenard
Loynograd Offline
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Originally Posted By kmenard
Thanks for the information. One more question, if the customer is a developer and we do a "master" note that will be secured by all the dwellings he is building, would this be exempt from the notice and copy of the appraisal requirements?


We gave the notice (annually) when the master note was executed. In our opinion, there was one application for credit and each individual loan executed under the master note wasn't a new application for credit; therefore, the notice was not required.

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#2076697 - 05/03/16 01:34 PM Re: Appraisal Required for Commercial Loans kmenard
John Burnett Offline
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If the application is for credit to be secured by multiple dwellings under a master note as you have described, kmenard, section 1002.14 will not apply, period. See my 2/25/2016 post in this thread.
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