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NCUA’s Proposed Appraisal Rule: Part One

Category: Lending
By Michael Christians    No Comments

On June 26th, the National Credit Union Administration (“NCUA”) published a proposed rule in the Federal Register related to appraisals. In today’s post, I’ll discuss part one of the proposed rule. Next Tuesday, I’ll discuss parts two and three.

Currently, under Section 701.31(c)(5) of the NCUA’s rules and regulations, Federal credit unions (“FCUs”) are required to make available, upon request, a copy of any appraisal used in connection with a member’s real estate related loan application. However, due to recent amendments to Regulation B, this requirement is now at least partially redundant.

Previously, FCUs were exempted from Section 1002.14 of Regulation B, which requires that applicants be provided a copy of any appraisal or other written valuation developed in connection with an application for credit to be secured by a first lien. However, this section now applies to all creditors, including FCUs.

As a result, the NCUA is proposing to revise its rule to make it applicable to only those real estate related applications that will be secured by a subordinate lien. Since applications secured by a first lien are governed by Regulation B, there is no need for the NCUA rule to duplicate those efforts. In the event the rule is finalized as proposed, credit unions should be prepared to comply as follows:

  • All credit unions are required to provide a copy of any appraisal or other written valuation developed in connection with an application for credit to be secured by a first lien on a dwelling. The copy must be provided upon the earlier of: i) promptly upon completion; or ii) three business days prior to closing.
  • Upon request, FCUs must make available to the member a copy of any appraisal used in connection with an application for credit to be secured by a subordinate lien.

If your credit union would like to comment on the proposed rule, comments must be received on or before August 25th. Stay tuned for parts two and three of the proposed rule, coming next Tuesday to a blog near you. In the meantime, have a nice weekend.

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