On Friday, the Consumer Finance Protection Bureau announced they have amended ECOA, Regulation B. The revisions to Regulation B require creditors to provide applicants with free copies of home appraisals before closing, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly. The rule will go into effect in January 2014 and applies to first-lien mortgages.
The outcome is to give borrowers a better understanding of their home value and how it was determined. “Having this information available promptly makes it easier for loan applicants to make informed decisions,” CFPB Director Richard Cordray told The Street.
The rule will allow lenders to continue charging reasonable fees for appraisals, but will prevent charging borrowers for the copy of the appraisal.
The current law allows the mortgage applicant to request a copy of the appraisal, but when the new rule goes into effect in a year, borrowers will get free copies of appraisals automatically. Many borrowers are unaware of their right to request a copy of the appraisal from the lender.
In addition, lenders will be required to notify borrowers of their rights within three days of borrowers applying for a loan. Sending of the appraisal copy should take place after the appraisal is completed, and within three days before closing.