On a pre-approval program, is the Reg B appraisal notice required to be sent to the consumer?

Yes - in connection with an application for credit that is to be secured by a first lien on a dwelling.

Well, we just heard from the FDIC that the notice is not required:

The ECOA appraisal notice does not need to be provided following the receipt of a pre-approval application. For the reason that as long as there is no address provided the notice is not triggered.

That makes sense, but don't depend on it to be "common" sense when it comes to all examiners or regulators.

I'm a bit confused by the purpose of this question. Did you ask if the appraisal notice is required on a transaction where there is not appraisal? I think the answer there is obvious.

Norman, we asked if the ECOA appraisal notice was required on a pre-approval.

I remember when the Reg B appraisal notice requirement came out, I got beat up for stating my opinion that the notice is not required until a property address is identified (glad to see at least one FDIC examiner agrees!). An appraisal is never going to be ordered for a pre-approval, since there's no property to appraise, so why would you deliver the notice? When a property is identified and it transitions to an application, that's when you're going to order an appraisal and would make sense that's when the notice requirement would come into play (it will be on the LE). But I agree, the regulation does not explicitly exempt the requirement to deliver the notice if a property has not yet been identified, thus leading to the mixed opinions. And of course, under Reg B a property address is not a required element to have an "application".

I'm also curious - are other FI's sending out a stand-alone Reg B appraisal notice if an application is denied or withdrawn within 3 business days, if no LE goes out?

For you first item, I think it still stands to reason that an application for a preapproval should get the disclosure, at least for our shop as that application serves as our sole application for the purchase, and you know the eventual loan will be secured by a 1-4 family.

Waiting for a property address is simply semantics at that point and nothing about the property would influence the appraisal disclosure, as it certainly could the LE, hence why it would not be prudent to send an LE without knowing the specifics about the property. But I digress.

To answer your question, the rulemaking makes no provision not to send it out if denied or withdrawn within the first three days. An oversight IMO. That said, when I review a denied or withdrawn within three day file, as long as see a copy of the disclosure there, then I assume it has gone out with the denial or withdrawn notice as per the rule stands.

To your last point, we also send out the Notice on a denied/withdrawn app, and I agree the Rule writers did a poor job on that one. A year or more ago I remember asking our FDIC EIC about it and just got a "huh....never thought about that" response...