Regarding rule 1002.14- Would like to confirm that ALL valuation types must be provided to the borrower once determined completed and no less than 3 days prior to closing. Example: Appraisal and Desktop Appraisal were ordered, both must be delivered to the borrower, correct?

Yes. The text of Reg. B states, "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."

You might have to define a desktop appraisal. Did it assign its own value to the property, or did it just not challenge the value of the original appraisal or the validity of the contents?

3. Other documentation. Not all documents that discuss or restate a valuation of an applicant's property constitute a "valuation" for purposes of § 1002.14(b)(3). Examples of documents that discuss the valuation of the applicant's property or may reflect its value but nonetheless are not "valuations" include but are not limited to:

vi. Appraisal reviews that do not include the appraiser's estimate of the property's value or opinion of value.

Thank you. Yes the Desktop states its own value which in this case was the same as the appraised value.

I guess I am curious as to why both a desktop appraisal and appraisal were ordered? And as Randy stated, you might need to define what you mean by the desktop appraisal and/or provide a bit more background on the specific situation. Did you order the desktop appraisal first, and then decided you needed the full appraisal? In that case, you (most likely) need to provide both copies as you have two separate appraisals from two different appraisal orders. As In Fairness stated, Reg B states that you need to provide "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."

All that said, if you just go ahead and provide copies of both, you won't have issues with Regulation B.

"Desktop appraisal" is defined by Fannie and Freddie as an appraisal without a site visit.

Yes, there was no site visit, but an opinion of value is provided. Thank you

Follow up question- HPML-Multiple versions of the same appraisal-Original appraisal was provided timely. The lender requested the appraiser address something-appraiser added a comment and re-dated the appraisal. No impact to value/adjustments etc. Was the updated version of the appraisal supposed to be delivered no less than 3 business days prior to the closing? In this case it was not.

For purposes of § 1002.14(a)(1), the reference to “all” appraisals and other written valuations does not refer to all versions of the same appraisal or other valuation. If a creditor has received multiple versions of an appraisal or other written valuation, the creditor is required to provide only a copy of the latest version received. If, however, a creditor already has provided a copy of one version of an appraisal or other written valuation to an applicant, and the creditor later receives a revision of that appraisal or other written valuation, then the creditor also must provide the applicant with a copy of the revision to comply with § 1002.14(a)(1). If a creditor receives only one version of an appraisal or other valuation that is developed in connection with the applicant's application, then that version must be provided to the applicant to comply with § 1002.14(a)(1). See also comment 14(a)(1)-4 above.

"the creditor later receives a revision of that appraisal or other written valuation, then the creditor also must provide the applicant with a copy of the revision to comply with § 1002.14(a)(1)."

Yes, delivery of the revised appraisal is required.

"The lender requested the appraiser address something-appraiser added a comment and re-dated the appraisal."

How is a lender allowed to even talk the appraiser, let alone request a change and still maintain independence?

The operations/underwriting department, not sales, requested they comment on the oil tank in the basement, if it had any leakage or not. The appraiser stated no leakage and re-signed the appraisal.

Follow up question on this- HPML - Appraiser sent an incomplete appraisal to the lender, it did not contain the location map. The lender requested the appraiser provide the appraisal, including the map. The next day the lender received the completed appraisal and delivered the completed appraisal to the borrower. The appraisal was delivered timely. QC is stating the initial appraisal, received the day before, also needed to be provided to the borrower. Is this accurate?

No. A rejected appraisal is not complete.

4. Timing. Section 1002.14(a)(1) requires that the creditor "provide" copies of appraisals and other written valuations to the applicant "promptly upon completion," or no later than three business days before consummation (for closed-end credit) or account opening (for open-end credit), whichever is earlier.


iii. "Completion" occurs when the last version is received by the creditor, or when the creditor has reviewed and accepted the appraisal or other written valuation to include any changes or corrections required, whichever is later. See also comment 14(a)(1)-7.

You only need to send the latest and greatest.


1002.14(a)(1) - Comment 7. Multiple versions of appraisals or valuations. For purposes of § 1002.14(a)(1), the reference to “all” appraisals and other written valuations does not refer to all versions of the same appraisal or other valuation. If a creditor has received multiple versions of an appraisal or other written valuation, the creditor is required to provide only a copy of the latest version received. If, however, a creditor already has provided a copy of one version of an appraisal or other written valuation to an applicant, and the creditor later receives a revision of that appraisal or other written valuation, then the creditor also must provide the applicant with a copy of the revision to comply with § 1002.14(a)(1). If a creditor receives only one version of an appraisal or other valuation that is developed in connection with the applicant's application, then that version must be provided to the applicant to comply with § 1002.14(a)(1). See also comment 14(a)(1)-4 above.

Thank you! QC is stating section 1002.14 does not apply to HPML appraisal delivery rules...They are very difficult!

1002.14 does apply to HPML, but they are not the same rules, and you have to comply with both. For example, you can't waive the 3-day timing for HMPL appraisal delivery.

The HPML rules do not have the same commentary as 1002.14 about completion or multiple versions. They are silent on it as far as I can tell, but I think the same principles would apply, and I would not give an applicant incomplete appraisal versions. I don't think that was the intent of the HMPL rule, and I think it would likely be confusing for the applicant.

I agree, but I can't find anything concrete to support- Other than multiple versions in 1002.14, but they will not accept that. Seems reasonable multiple versions would apply to HPML as well. HPML specifically calls out 1002.14(a)(1) timing waivers don't apply, but does not say multiple versions doesn't apply. Frustrating!

If you go back to the original addition of the appraisal requirements in 2013 and read the summary section of the final regulation, you will find the following:

SUMMARY:

The Board, Bureau, FDIC, FHFA, NCUA, and OCC (collectively, the Agencies) are issuing a final rule to amend Regulation Z, which implements the Truth in Lending Act (TILA), and the official interpretation to the regulation. The revisions to Regulation Z implement a new provision requiring appraisals for “higher-risk mortgages” that was added to TILA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or Act). For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used.


A lender does not "use" an appraisal that is not accepted so there is no reason to jump through hoops of delivery of any preliminary copies. You need to tell your QC people to go find something that is meaningful in their reviews and quit wasting your time.

QC: "We have finding gosh darn it, and you can't take it from us!"

I'm assuming they wouldn't be wasting anyone's time with this unless everything meaningful was being taken care of, so I'd just take it as a compliment and send the extra versions.

I would absolutely not send extra versions. You are setting yourself up for future failures when adopting practices that are not regulatorily required.

I agree with others that you should not be sending multiple versions. First, that would be extremely confusing to consumers and probably ripe ground for regulator scrutiny or UDAAP. Secondly, unless you ESIGN everything, sending multiple versions by mail would have a very large added expense for those you do mail.

Maybe try explaining that the appraisal is the final version, and it would be like requiring us to send a (courtesy) LE out every time we added a data point to a blank field when trying to finalize it for the applicant. The appraisal is the final version that was used for the credit decision, just like the LE is the fully completed form that is sent to the applicant.

Thank you all for the feedback. We will give it one last try with RLCarey's SUMMARY above- Even if we provided the incorrect version now, it is considered outside of the 3 business day prior to closing time frame-per QC, so no point in that.

To add to this discussion, what if the loan was in second position, but we did indeed obtain an appraisal? Since we have an appraisal and depended on it for our decision, then I would think the Acknowledgement of Appraisal Delivery would need to be provided and signed. Would this be true?

As the Reg B appraisal rules only apply to loans secured by a first lien on a dwelling, it would not be required.

1002.14(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.

Additionally, an Acknowledgement of Appraisal Delivery is purely an internal or investor form and is not required under the regulation. It is purely a CYA form.