Proposed CFPB Rule Requires Lenders to Provide Free Appraisal Reports

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) released Wednesday a ""new proposed rule"":http://files.consumerfinance.gov/f/201208_cfpb_ECOA_proposed_rule.pdf that would require mortgage lenders to provide home loan applicants with appraisal reports to determine how the value of a property was determined.

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CFPB proposed the rule in response to a provision of the Dodd-Frank Act that requires creditors to provide mortgage applicants with a copy of written appraisals and home value estimates. The newly-proposed rule would require that creditors inform applicants of their right to receive a free copy of appraisal reports and home estimates.

Consumers are to be informed of this right within three days of applying for a loan. Creditors would be required to provide these reports to consumers as quickly as possible and no later than three days before closing, regardless of whether credit is extended, denied, incomplete, or withdrawn.

""When looking to buy a home or refinance a mortgage, consumers need the best available facts and data,"" said CFPB director Richard Cordray. ""This rule would guarantee consumers receive important disclosures on how a lender determines the value of the home, making it easier for loan applicants to make informed decisions.""

Consumers are usually charged for the costs related to conducting appraisals. Currently, consumers must request appraisal reports from creditors, and they are sometimes charged a fee to obtain a report.

Under the proposed rule, creditors may still charge reasonable fees associated with conducting appraisals to assist in lending decisions. However, they may not charge fees for providing a copy of an appraisal report.

The proposed rule is open for commentary until October 15, at which point all comments will be reviewed and considered before the final rule is issued in January 2013.