Does the appraisal notice and delivery requirements apply to a loan secured by commercial tracts of land with a 1-4 dwelling that will be demolished to built apartments? An appraisal on the land only was ordered?

Thank You

Great question. Is the loan initially going to be secured by a first lien on a dwelling?

(2) Disclosure. For applications subject to paragraph (a)(1) of this section, a creditor shall mail or deliver to an applicant, not later than the third business day after the creditor receives an application for credit that is to be secured by a first lien on a dwelling, a notice in writing of the applicant's right to receive a copy of all written appraisals developed in connection with the application. In the case of an application for credit that is not to be secured by a first lien on a dwelling at the time of application, if the creditor later determines the credit will be secured by a first lien on a dwelling, the creditor shall mail or deliver the same notice in writing not later than the third business day after the creditor determines that the loan is to be secured by a first lien on a dwelling.

The dwelling will be demolished after closing so I guess we will initially have a lien.

So that is the answer I would go by.

On a side note, I was once auditing a bank and found a file where an LO waive a requirement (happened to be flood insurance, but the story still holds) because the structure/old house was going to be torn down. He even had written communication in the file from the customer saying this. I was auditing the file 3 years later and noticed this and had someone go by the property to see if the structure was still standing - which it was.

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Providing the notice and a copy of the appraisal is such "small potatoes" I wonder why lenders don't just do it instead of asking for forgiveness later (when QA or compliance questions the lack of documentation that the notice and appraisal copy were provided).