ECOA Appraisal rule for Debt Modification

Posted By: Likes to Comply

ECOA Appraisal rule for Debt Modification - 03/18/20 08:59 PM

A commercial dwelling secured loan changing the rate and extending out the maturity via a debt modification. The appraisal obtained three years ago at the origination of the loan was re-validated by our on staff appraiser. Must a copy of the re-validation be given three days in advance of consummation of the debt modification?
Posted By: Adam Witmer

Re: ECOA Appraisal rule for Debt Modification - 03/19/20 11:47 AM

Great question as this can be quite confusing. In short, the answer is yes. The re-validation is new and the customer has not yet received a copy, so they should be provided with one. The preamble to the final rule talks about this in a round about way, but here is what the commentary says:

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.