Given the volume and complexity of the CFPB’s new mortgage rules related to Reg Z and Reg X, we haven’t focused much on the new Reg B appraisal rule. However, we are seeing some confusion with the timing requirements, so here is some information that hopefully clarifies the timing.
The rule generally provides that a copy of all appraisals or valuations developed in connection with the application must be provided promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier. Note that if promptly upon completion is earlier than three business days prior to consummation, then you would need to meet the promptly upon completion timing standard. The difficulty is that the rule doesn’t provide a bright line timeframe for promptly upon completion but rather indicates that it depends on the facts and circumstances. The commentary to the rule (aka the Official Interpretations) contains some examples of what constitutes promptly upon completion.
Members can waive the timing requirements (if otherwise permitted by law). If that happens, you would then be obligated to provide a copy at or before consummation or account opening. Keep in mind that there are specific standards surrounding the waiver and the timing with respect to receipt of the waiver.
If the loan is not consummated or the account is not opened (or if the application is incomplete or withdrawn), you still must provide a copy of all appraisals or valuations developed in connection with the application. Because the loan is not going to be consummated or the account is not going to be opened, the only timing option you have left is “promptly upon completion.” Thus, the copy must be provided promptly upon completion if the loan is not consummated or the account is not opened. Again, there is no bright line timeframe as to what will meet the promptly upon completion standard.
If the credit union obtains a waiver AND the loan is not consummated or the account is not opened, the credit union must provide a copy of the appraisal or valuation within 30 days of making the determination to not consummate the loan or open the account.