[jholzknecht]

Recent question submitted by a subscriber:
I need your help – is there an exemption in Reg B from the requirement to provide the applicant with the appraisal notice within three business days of the application date if the application is denied or withdrawn within the three business days? If so, I can’t find it. It makes sense to me that you wouldn’t have to give that notice, especially if you haven’t ordered the appraisal, if it’s withdrawn or denied within three days, but I’m either overlooking it or just going crazy!

[jholzknecht]

I have struggled with this provision as well. My advice has been to provide the notice in any event. While there is nothing that states that it must be given, as is the case for the providing the appraisal,there is also nothing that states that it is not required.

The notice states, in part, “We will promptly give a copy of any appraisal, even if your loan does not close.” How would the applicant know to expect an appraisal on a withdrawn or denied application if he or she did not receive the notice?

Clearly the best practice is to give the notice. Is the failure to provide the notice a violation? That will be up to the individual examiner, until this matter is clarified in the regulation. I would be surprised to see an examiner cite this as a violation.

[ScottH]

Does the rule not state that it the notice is required when (a)(1) applies. Since the loan has been denied and we know that (a)(1) does not apply since an appraisal or evaluation will not be ordered should the disclosure requirement not apply as well? It seems this would be confusing to the customer to be denied and then receive a notice stating that we may order an appraisal. Even though the notice says may it is not accurate since there is no possibility that we will and using may implies a possibility.

(a) Providing appraisals and other valuations. (1) In general. A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. (2) Disclosure. For applications subject to paragraph (a)(1) of this section, a creditor shall mail or deliver to an applicant, not later than the third business day after the creditor receives an application for credit that is to be secured by a first lien on a dwelling, a notice in writing of the applicant’s right to receive a copy of all written appraisals developed in connection with the application.

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