Reg B Appraisal Notice Requirements

Can any tell me where in Reg B it states that if an appraisal is given to a customer it must include evaluations. My home Equity Dept. is asking for a follow up.

I believe you must put two rules together to come up with what you are actually looking for. The following is from Reg B commentary and states that you don't have to give readily available public documents, such as tax record evals.

14(c) Definitions.
1. Appraisal reports. Examples of appraisal reports are:
i. A report prepared by an appraiser (whether or not licensed or certified), including written comments and other documents submitted to the creditor in support of the appraiser’s estimate or opinion of the property’s value.
ii. A document prepared by the creditor’s staff that assigns value to the property, if a third-party appraisal report has not been used.iii. An internal review document reflecting that the creditor’s valuation is different from a valuation in a third party’s appraisal report (or different from valuations that are publicly available or valuations such as manufacturers’ invoices for mobile homes).

2. Other reports. The term “appraisal report” does not cover all documents relating to the value of the applicant’s property. Examples of reports not covered are:

i. Internal documents, if a third-party appraisal report was used to establish the value of the property.
ii. Governmental agency statements of appraised value.
iii. Valuations lists that are publicly available (such as published sales prices or mortgage amounts, tax assessments, and retail price ranges) and valuations such as manufacturers’ invoices for mobile homes.

Then you must go to appraisal guidelines for the rest.

An institution should establish prudent standards for the preparation of evaluations. At a minimum, an evaluation should:

• Be written;


• Include the preparer's name, address, and signature, and the effective date of the evaluation;


• Describe the real estate collateral, its condition, its current and projected use;


• Describe the source(s) of information used in the analysis;


• Describe the analysis and supporting information, and;


• Provide an estimate of the real estate's market value, with any limiting conditions.


An evaluation report should include calculations, supporting assumptions, and, if utilized, a discussion of comparable sales. Documentation should be sufficient to allow an institution to understand the analysis, assumptions, and conclusions. An institution's own real estate loan portfolio experience and value estimates prepared for recent loans on comparable properties might provide a basis for evaluations.

An evaluation should provide an estimate of value to assist the institution in assessing the soundness of the transaction. Prudent practices also require that as an institution engages in more complex real estate-related financial transactions, or as it overall exposure increases, a more detailed evaluation should be performed. For example, an evaluation for a home equity loan might be based primarily on information derived from a sales data services organization or current tax assessment information, while an evaluation for an income-producing real estate property should fully describe the current and expected use of the property and include an analysis of the property's rental income and expenses.

Hope this clears things up for you!

Thanks for the detail it really helps, but I still am not sure of one thing, for our HE Loans & Lines we generally will use CBC or a hit. They have a disclaimer that the Home Values are for the Bank's cofidential use only. Not sure how to work around that. Any suggestions?

Not sure what "CBC or a hit" are, but if you used whatever those things are to establish the value of the property and the customer paid for it, you have to give it to the customer if they request it. (And starting whenever section 1474 of Dodd-Frank is implemented, you'll have to give it to the customer automatically.)

I believe the confidentiality clause is there so you won't share the product with any other third party because it's basically unenforceable with respect to the customer.

Good luck.

I agree with WOW, except for one thing...you have to give it to them so long as it's not a public document they can obtain themselves. As far as them paying for it...that would only be required if you require payment (just so as not to confuse with thinking you don't have to give if you don't charge for it)