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We are working on a loan to permanently finance a consumer mortgage construction loan that has matured, and it is a first lien. We obtained an appraisal and provided a copy to the applicant. After that, we received our final appraisal inspection showing the home is complete. Does Reg B require we provide the final inspection copy and must it be provided 3 days (6 if USPS mailed) prior to closing? The value is stated as “original appraisal value” and matches the appraisal, and confirms that the home is 100% complete and shows pictures. The final inspection seems to meet one of the documents described in the definition of valuation that is not considered a value for the purpose of disclosure. Is that correct?
Also, to clarify the question, if the final inspection changes the value, wouldn’t we need to wait if a new value is given?
In general, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly.
In most cases the purpose of appraisal is to determine the fair market value of the property, while an inspection determines the condition of the home and identifies any items in need of repair.
In the case of a new build the inspection would be to determine if everything was completed on the property. In some cases, especially, in the Midwest you will see property inspections come back requiring an escrow account to be created for the sod on winter builds. They will still value the property like the appraisal it just indicates there are still minor things needing to be completed. If your inspection is for this purpose than it would be excluded from disclosure requirements.
If the valuation were to change a homes value then yes it would be considered a disclosure event and would follow the appraisal requirements in Reg. B.
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