Regulations B & Z Appraisal Rules
Do you fully understand the nuances of these two regulations? Examiners and auditors report that many creditors are still struggling with the requirements. Attend this program to master the Regulation B & Z Appraisal Rules.
Appraisal rules in Regulations B and Z were revised effective January 18, 2014. Now that the rules have been in place for a year reports of violations are filtering in from examiners and auditors. The results are as expected – most creditors are complying with the new rules but some seem a little confused by the requirements. Reported violations generally result from a lack of mastery of the fine details.
Some creditors had problems with coverage rules. They comply fully with certain loan types but fail to comply on other transactions, such as certain business loans secured by a dwelling.
Other violations result from a failure to understand that the requirements apply not only to appraisals, but also to other written valuations, such as an AVM, a broker price opinion or a document prepared by the creditor’s staff that assigns value to the property.
Timing requirements for delivering the notice and the copy of the appraisal caused numerous problems. Both regulations require delivery of the notice within three business days after receiving an application. However, the timing requirements for the copy of the appraisal differ. Regulation B requires delivery promptly upon completion or three business days prior to consummation/account opening, whichever is earlier. Regulation Z requires delivery three business days prior to consummation.
Apparently some creditors grant waivers of the delay before closing in cases where waivers are not allowed.
Make sure you have mastered the nuances of these two regulations. The complexity arises from the near duplication of requirements from one regulation to the other. If the requirements were exactly the same there would not be an issue. But when the requirements are similar, but not quite the same, confusion reigns.
- What transactions are covered by the appraisal requirements in Regulation B and Regulation Z and the differences in coverage between the two regulations;
- What transactions are exempt from coverage;
- The requirement to provide a disclosure of the right to receive a copy of the appraisal;
- The requirement to provide an appraisal or other written valuation;
- What is or is not considered to be an appraisal or other written valuation;
- The timing requirement for delivering the disclosure and the copy of the appraisal;
- When and how the consumer may waive the delay in closing the transaction;
- When the regulations require an appraisal;
- When the regulations require a second appraisal; and
- When the requirement to get a second appraisal is exempt.
Loan officers, compliance officers, loan support staff and auditors
Jack Holzknecht, CRCM, is the CEO of Compliance Resource, LLC. He has been delivering the word on lending compliance for 39 years. Jack’s career began as a federal bank examiner. He also headed the form and software division of a regional consulting company. He has developed and presented training programs to bankers in 43 states. He also developed and delivered training for the FDIC.
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