Compliance Alliance Q&A 10/14/2020

Q:  When you have multiple 1-4 family dwelling properties securing a loan, does the bank still have to comply with the appraisal notice requirement and the appraisal acknowledgement/receipt of receiving appraisal 3-days before closing?

 

A: Regulation B, 12 CFR 1002.14(a)(1) requires a creditor to provide an applicant with a copy of “appraisal or other written valuations developed in connecting with an application for credit that is to be secured by a first lien on a dwelling.”  

Section 1002.14(b)(2) further defines a dwelling to include residential structures of one to four units. 

The Regulation does not address loans secured by multiple dwellings.  Conservatively, to the extent the loan will be secured by a first lien on any 1-4 dwelling, the appraisal requirements set forth in section 1002 above would apply for each such dwelling. 

Additionally, Section 1002.14(a)(2) requires the provision of a disclosure to the applicant, 

C/A interprets this subsection to require only one disclosure requirement, provided that it addresses all applicable appraisals.  If the disclosure has the specific address(es) or if bank policy states otherwise, the bank is not directly prohibited from sending multiple notices either. 

Of course, please note, the borrower would still need to receive each appraisal promptly upon completion or within three days of closing, whichever is earlier.  

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