Details of the Consumer Financial Protection Bureau's new rule on real estate appraisals and other written valuations under the Equal Credit Opportunity Act, and how the rule could impact credit unions, are addressed in a new National Credit Union Administration Regulatory Alert (13-RA-07).
The appraisal rule, issued under Regulation B, implements changes to the Equal Credit Opportunity Act (ECOA) that were made under the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is intended to ensure that consumers can receive information prior to a loan closing about how the property's value was determined.
In the alert, the NCUA reminds credit unions that receive applications for first-lien loans to be secured by a dwelling on or after Jan. 18, 2014, that they must:
- Notify applicants in writing within three days of receiving the application that they have the right to receive copies of all appraisals and written valuations; and
- Provide a free copy of these appraisals and written valuations developed in connection with the loan application, promptly after they are completed, or three days before the loan closes, (whichever is earlier) regardless of whether the credit is extended, denied, incomplete, or withdrawn.
The NCUA regulatory alert also addresses what types of loans are covered under the rule, what constitutes an appraisal or other written valuation, when and how credit unions should deliver valuation copies to applicants, and how the ECOA valuation rule relates to a Higher-Priced Mortgage Loans (HPMLs) appraisal rule that was issued by the NCUA and five other federal financial institution regulators on Jan. 18.