[rcooper]

A question we received via email:

I’ve having a brain freeze and need your help. I couldn’t see where you covered the new ECOA appraisal waiver rules in CMG materials. It’s been my understanding that the “appraisal waiver” rule was intended to be used as an “exception” and not a general course of dealing but I can’t find any place where that might be referenced. I’m doing an audit where the client is providing the waiver notice with the early disclosures and having it returned that they waive the 3 days to close for receipt of the appraisal, even before the appraisal is ordered. They have other compliance issues, but this one is particularly troubling to me (in 6 of 10 samples). Is this permissible? Can you please provide your insights?

[rcooper]

Answer: We covered the ECOA appraisal/valuation delivery rules in May of 2013.

There isn’t anything that would prohibit a financial institution from providing a waiver form. However, financial institutions should consider that the rule was put in place to allow applicants to generally receive copies of appraisals/valuations promptly upon completion or 3 business days before consummation, whichever is earlier. The key is whether customers are making the decision to waive the timing requirement or is the bank requiring the waiver to be signed – it should be applicant’s choice to waive the timing requirements.

Perhaps the financial institution is doing something similar to what Jack has suggested in the past which is, early in the application process the lender could have a conversation with the applicant letting him/her/them know that the bank will be required to wait three business days after delivering the appraisal to close the loan and explaining the waiver that can be used if the customer is under a time constraint and would prefer not to wait the three business days to close. Since the customer must waive the timing requirement no later than three business days prior to consummation it makes sense to address it early in the relationship.

And just as reminder, there is no waiver for delivery timeframes under the HPML appraisal rules.

[rcooper]

Response by Jholzknecht:
I understand some examiners are criticizing banks for “requiring” consumers to waive. Examiners are performing a penetration analysis and when the percentage is very high the banker is deemed to have required the waiver.

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