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Renewal w/Vacant Land as Collateral-Evaluation

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Question: 
Two years ago we granted a new loan and took a first mortgage on a piece of vacant land as collateral. The loan is now going through a renewal. While completing the evaluation, we learned that the borrower; using his own cash, built a home on the property that’s encumbered. The way our mortgage reads, we have interest in ... all existing or subsequently erected or affixed buildings, improvements, and fixtures... When we complete the valuation report, should the value of the home be included in the report and furthermore, if so, should the report be mailed to the borrower under Regulation B?
Answer: 

by John Burnett:

Yes on both counts. And don't forget the notice of right to receive that copy.

Yes on the scope of the evaluation or appraisal. Your collateral encompasses the real estate and the dwelling, so of course you need the value of the whole ball of wax.

Yes on the copy. Regulation B requires that you provide the copy because the renewal will be secured by a first lien on the dwelling.

And the notice is part of the same requirement. It should have been sent within three days of the borrower's asking to renew the loan learning of the dwelling on the property.

First published on 07/15/2018

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