The CFPB recently published two factsheets addressing transaction coverage and appraisal delivery requirements under the ECOA Valuation Rule. The transaction coverage factsheet considers three components for creditors to consider in determining whether a transaction is covered by the Valuation Rule. The appraisal delivery factsheet describes what is and is not prompt delivery, illustrates three delivery methods, and discusses the conditions for obtaining a waiver.
The transaction coverage factsheet instructs creditors to determine whether a transaction is subject to the Valuation Rule by asking:
- Is there an application for credit?
- Is the application secured by a first lien on a dwelling?
- Is an appraisal or written valuation prepared in connection with the application?
If the answer to each question is in the affirmative, then the transaction triggers the disclosure and valuation requirements of the ECOA Valuation Rule. The CFPB reminded that requirements of the ECOA Valuation Rule apply regardless of whether an application is approved, withdrawn, denied, or incomplete. The CFPB also explained that applications for loss mitigation programs also may be covered by the ECOA Valuation Rule under certain circumstances.
The CFPB stated that a dwelling is a one-to-four-unit residential structure and provided examples of structures that are dwellings and structures that are not considered dwellings. The CFPB also stated that mixed-use properties may generally satisfy the definition of a dwelling if the residential portion of the mixed-use property secures the loan. The factsheet explained that a valuation is any estimate of the value of a dwelling developed in connection with an application when it is prepared as part of the application process.
In the appraisal delivery factsheet, the CFPB explained that the Valuation Rule requires creditors to provide copies of appraisals and other written valuations to applicants promptly upon completion or no later than three days before the earlier of consummation or account opening, whichever is earlier. The factsheet illustrates delivery by mail, delivery by hand, and delivery by email. The factsheet also illustrates the respective timing requirements for each delivery method. The CFPB stated that, in addition to other requirements, a waiver of the timing requirements is only available if the applicant provides the creditor with a waiver statement, or if a valuation contains only clerical changes from a previous version.