Free appraisal reports for all borrowers under new CFPB rule
The Consumer Financial Protection Bureau adopted a new rule Friday that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates.
"As a general practice, most credit unions already do this," said Luke Martone, assistant general counsel for the Credit Union National Association. "The rule, in essence, requires other creditors to adopt the same high standards generally used by credit unions."
The rule was required 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.
"Having this information available promptly makes it easier for loan applicants to make informed decisions," said CFPB Director Richard Cordray when announcing the rule's release.
The final rule also requires creditors to:
- Inform consumers within three days of receiving an application for a loan of their right to receive copy of all appraisals; and
- Provide the copies of appraisal reports and other written home-value estimates to consumers promptly, or three days before closing, whichever is earlier.
The requirements go into effect in January 2014 and will apply to first-lien mortgages.
The new rule, issued under Regulation B, eliminates an exemption for federal credit unions that was included in the Federal Reserve's 1993 rule because the National Credit Union Administration had a similar rule requiring free reports be provided only when requested.