The CFPB adopted a new rule on Friday to require mortgage lenders to provide loan applicants with free copies of home appraisals to ensure that customers are aware of how the property’s value was determined.
“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” CFPB Director Richard Cordray said. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”
Home appraisals and other home-value estimates are generally used by mortgage lenders in their decision-making process. Consumers are normally charged for appraisal costs, but current federal law does not require that consumers receive a copy of the appraisal or any other home-value estimate documentation unless requested.
Under Dodd-Frank, however, lenders are required to inform consumers within three days of receiving a loan application of their right to a copy of all home-value appraisals. Creditors will be required to provide free copies of the documentation promptly or three days before closing, whichever comes earlier.
The rule, which is set to take effect in January 2014, will apply to first-lien mortgages and follows a rule released recently by six federal agencies requiring certified appraisals for higher-priced mortgages. Certain loans, however, including qualified mortgages, houseboat and trailer loans, temporary bridge loans, construction loans, and loans for new manufactured homes.