[Michelle]

Is the Right to Receive Appraisal Disclosure required on a renewal of a business loan that is secured by a dwelling? Our Bank does not currently require a new application on a business loan renewal, but wondering if we have a gap with the Appraisal Disclosure in these situations. Thank you in advance for your assistance.

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[rcooper]

If the requirement to provide the appraisal applies to a renewal (see below) then the disclosure requirement applies as well. I would also note if you aren’t sure whether you’ll use an existing appraisal/valuation or order a new one you may want to consider giving the notice. If not, ensure your procedures require sending it once the decision is made to obtain a new appraisal/ valuation.

Comment 1002.14(a)(1)-2 tells us:
Section 1002.14(a)(1) [the requirement to provide an appraisal or valuation] applies when an applicant requests the renewal of an existing extension of credit and the creditor develops a new appraisal or other written valuation. Section 1002.14(a)(1) does not apply to the extent a creditor uses the appraisals and other written valuations that were previously developed in connection with the prior extension of credit to evaluate the renewal request.

[Michelle]

Great, thanks Robin.

[Michelle]

Follow up question – if we have a guidance line of credit for a builder that is constructing spec homes, and we will be taking a new SFR as collateral for each draw on the line, do we cover the requirement by providing the builder with the disclosure at the time of the guidance line of credit application or is a new disclosure required for each new collateral requests?

[Author]

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