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#2101845 - 10/05/16 03:57 PM Dwelling Secured Loan valuation on land only
It's not easy Offline
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Joined: May 2009
Posts: 127
The following question seems to trip me up every time I get asked so I thought someone might be able to help me.

The Commercial/Ag area is processing a loan where the collateral is secured by 1-4 family dwelling and surrounding acres. If the appraisal/valuation was only done on the land, does the appraisal/valuation still need to be provided to the borrower?

My first thought is yes because the loan is secured by a dwelling and the citation doesn't indicate that the appraisal needs to be on the dwelling. Any thoughts?

1002.14(a)
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.

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Interagency (Reg Z) and CFPB Reg B Appraisal Rules
#2101849 - 10/05/16 03:59 PM Re: Dwelling Secured Loan valuation on land only It's not easy
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Yes, it is required, regardless of the type of appraisal you may have ordered.
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#2101857 - 10/05/16 04:10 PM Re: Dwelling Secured Loan valuation on land only It's not easy
It's not easy Offline
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Joined: May 2009
Posts: 127
Thank you!

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#2101882 - 10/05/16 04:56 PM Re: Dwelling Secured Loan valuation on land only It's not easy
It's not easy Offline
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Joined: May 2009
Posts: 127
Sorry, I have a follow up question only because I know I will get challenged. The definition of valuation states the following:

1002.14(b)(3).Valuation.
The term “valuation” means any estimate of the value of a dwelling developed in connection with an application for credit.

Because on an Ag loan where the loan is secured by the dwelling but the valuation itself does not include an estimate of the dwelling, would the valuation still be required to be provided?

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#2198707 - 11/19/18 11:48 PM Re: Dwelling Secured Loan valuation on land only It's not easy
banker-12 Offline
Diamond Poster
Joined: May 2007
Posts: 1,240
Our commercial department also requests a valuation on land only and does not consider the value of the dwelling. In one case, the dwelling was old with minimal value (statement on the valuation form but no actual value given).

Do we need to follow the appraisal requirements and give copy of appraisal/valuation to the customer?

Thanks,

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#2198762 - 11/20/18 04:31 PM Re: Dwelling Secured Loan valuation on land only It's not easy
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Just ask yourself if there was a dwelling on the appraised property. Whether there is any value in the dwelling or not, it's a dwelling and it is part of the security for the loan. Better to spend the dollar or two needed to provide the notice and copy than to spend time arguing with an auditor or examiner.
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