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CFPB Adopts Rule to Improve Consumer Access to Appraisal Reports
Jan 18 - The Consumer Financial Protection Bureau has adopted a new rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates. The rule will ensure that consumers can receive information prior to closing about how the property’s value was determined.
“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said CFPB Director Richard Cordray. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”
Appraisals and other estimates of a home’s value are generally used by mortgage lenders to inform their decisions. Consumers are typically charged for the costs related to conducting an appraisal; however, currently the law does not require that consumers receive a copy of the appraisal unless they request it and does not require that consumers receive a copy of any other estimates of the home’s value.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that lenders give consumers a copy of each appraisal or other estimate free of charge although a lender generally may still charge the consumer a reasonable fee for the cost of conducting the appraisal or other estimate. The Bureau’s new rule implements these requirements.
The rule also requires that creditors inform consumers within three days of receiving an application for a loan of their right to receive copy of all appraisals. Creditors will then be required to provide the copies of appraisal reports and other written home-value estimates to consumers promptly, or three days before closing, whichever is earlier. The new rule will go into effect in January 2014 and will apply to first-lien mortgages.
Click here for the final rule.
A summary of the CFPB’s rule is available at: http://files.consumerfinance.gov/f/201301_cfpb_ecoa-appraisals-rule_summary.pdf