Reg B Appraisal Copy

We have a situation where an appraiser went to inspect a property and came back to us with comments and pictures related to C5 condition property with extreme conditions making the property unsuitable for a mortgage. Basically the appraiser is asking if he should continue with the preparation of a full appraisal or not. The decision was made not to move forward, and the appraiser charged a partial fee and the rest was refunded the applicant that had paid an upfront payment after giving his intent to proceed.

My question is related to Reg B's requirement to provide the borrower with a copy of the appraisal. We don't have one obviously, but we are denying for unacceptable collateral. Is this a problem? Should we have moved forward with the appraisal to have one to provide to the borrower?

You can't provide something that you do not have and there is no requirement to do an appraisal on a loan that is being denied.

Thanks, Randy. I was worried since we have appraiser comments and photos in the file, but no actual report.

Make sure you document the file accordingly.

Without a statement of value, you don't have an appraisal. The appraiser did the bank -- and the applicant -- a favor by cutting it short and issuing the report using the language you described.

Just a couple of thoughts:

• How do you justify denying for collateral without a valuation?
• Reg. B is broader than appraisals, as it covers all written valuations
• For purposes of §1002.14, an “appraisal or other written valuation” includes, without limitation, an appraisal or other valuation received or developed by the creditor in paper form (hard copy); electronically, such as CD or email; or by any other similar media. Does what the appraiser provided rise to the level of a valuation?
• What did the applicant receive for the portion of the fee retained by the appraiser?

I don't know if what you received rises to the level of a valuation, but it does appear the borrower paid for something that they did not receive.

IMHO - The appraiser communicating a C-5 condition is not a valuation.

It is a condition report: Some significant repairs are needed to the improvements due to the lack of adequate maintenance. It reflects a property in which many of its short-lived building components are at the end of or have exceeded their physical life expectancy, but remain functional.