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January 24th, 2013

Lenders must provide free copies of appraisals

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Portrait of a relaxed young couple using a laptopThe Consumer Financial Protection Bureau has adopted a new rule that should give you more access to any appraisal report, automated valuation model report, realty broker price opinion or other written estimate of the value of your home or a home you want to purchase prior to closing your loan.

This information is important because a too-high valuation might lead you to over-pay for a home you want to buy or a low appraisal might derail your plan to refinance your existing loan.

“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said Richard Cordray, director of the CFPB, in a release. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”

Lenders generally use valuations as part of their process to decide whether to approve your loan application and, if so, how much money you’ll be allowed to borrow. You can already get a copy of your appraisal report if you paid for the appraisal and specifically request a copy of the report.

Lenders must provide appraisal reports

The new rule takes it further, requiring that lenders provide you with free copies of each appraisal or other form of valuation, and must inform you, within three days of your application, of your right to receive a copy of any appraisal or other valuation report. The copy must be given to you promptly after the report is completed or at least three days prior to closing, whichever is earlier.

The rule will become effective Jan. 18, 2014, and applies only to applications for first-lien mortgages.

You can waive your right to receive a report during the required timeframe. However, if you waive that right, the lender must still provide a copy of the report to you one or two days before closing, at closing or, if your loan doesn’t close, no more than 30 days after that determination has been made.

Think carefully before waiving your right

The CFPB says you should think carefully before you waive your right to get copies of valuations within the three days timeframe because it could take you a while to look over the information and decide whether it makes sense to you.

A lender can, and often will, charge for an appraisal. But the lender cannot charge additional fees for copies of an appraisal report or other valuation reports under the new rule.

Report violations

The rule might also help you figure out whether you might have been unlawful discriminated against in the loan process, according to the CFPB. Federal law prohibits lenders from discriminating on the basis of your race, color, national origin, sex, religion, age, marital status, receipt of income from any public assistance program or good-faith exercise of any right afforded by the Consumer Credit Protection Act.

You can report violations of the appraisal and valuation report rules to the CFPB by telephone, (855) 411-2372, fax, (855) 237-2392, or mail, Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa, 52244.

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3 Responses to “Lenders must provide free copies of appraisals”

  1. Mark Harris Says: January 29th, 2013 at 6:47 am

    Current law gives the mortgage applicant the right to request a copy of the appraisal from the lender, but most borrowers are not aware they can ask for one. When the new rule goes into effect, borrowers will automatically get free copies of appraisals, even if they don’t request them.

    Until then, it’s a good idea to ask your lender to give you a copy of the appraisal.

  2. Dana Says: March 1st, 2013 at 8:52 am

    As an appraiser I find the 24 hour turnaround completely out of touch. Wait a minute- you want a 30 page report, all comparables verified and all fraud risk analyzed and all comps photographed within 24 hours and you want it to be real, 100% analyzed and fair? And on top of that we (appraisers) can get sued if we miss any details? Yeah, right. Think about it folks. Do you want a fair appraisal of your house or dont you? 24 hour turnaround?? I think Frank Dodd needs a reality check. HOWEVER- I do think its a good thing that the owner should get a copy of their appraisal without hassle.

  3. sinna Says: September 29th, 2013 at 2:04 pm

    I think this is a good idea. The appraisal for my home seems to be inaccurate compared to the home that have sold recently in my area. It would be great to get more information on how they are coming up with the numbers.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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