Appraisal notice for subsequent loan?

Posted By: Banker57

Appraisal notice for subsequent loan? - 08/12/14 07:23 PM

If the same appraisal is used for a new note do the appraisal notice rules still apply? The appraisal has already been given to the consumer along with the right to the appraisal notice.
Posted By: Kathleen O. Blanchard

Re: Appraisal notice for subsequent loan? - 08/12/14 07:24 PM

1002.14(a)

Commentary

2. Renewals. Section 1002.14(a)(1) applies when an applicant requests the renewal of an existing extension of credit and the creditor develops a new appraisal or other written valuation. Section 1002.14(a)(1) does not apply to the extent a creditor uses the appraisals and other written valuations that were previously developed in connection with the prior extension of credit to evaluate the renewal request.
Posted By: scb2011

Re: Appraisal notice for subsequent loan? - 08/13/14 08:51 PM

Do you believe that the commentary here applies to "renewals" only, or would you also say that this applies to other types of similar credit products such as a refinance, or a completely new loan where a prior appraisal was used and no new valuation was made?

Reg B defines credit loosely and includes all types of credit, whereas Reg Z tends to distinguish between a renewal and a refinance.

Is the term "renewal" pertinent here, or are they really meaning that if an appraisal is not developed in conjunction with an extension of credit then the section does not apply?
Posted By: John Burnett

Re: Appraisal notice for subsequent loan? - 08/13/14 09:09 PM

There are two opinions on whether the notice requirement will still apply if you know that you won't be developing an appraisal in connection with an application. I'd err on the side of caution, and give the notice, which says you'll provide a copy of any appraisal developed in connection ....

As for the appraisal copy:
If you don't develop an appraisal because it's a loan type that doesn't require one, or because you are going to use a recent one from an earlier transaction, you don't need to provide the copy. That is true whether the current application is for a refinance, renewal, modification, extension, or new loan. The renewal used in the commentary is illustrative, not definitive.