New Rule Gives Borrowers Early Access to Appraisals

Lenders must provide mortgage applicants with free copies of all appraisals and other home-value estimates before the loan closing, according to a final rule the Consumer Financial Protection Bureau issued Friday morning.

“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said CFPB director Richard Cordray.

Consumers generally pay for an appraisal but they don’t receive a copy unless they request it. The CFPB rule also requires disclosure of any other home value estimates that the lender uses.

“Having this information available promptly makes it easier for loan applicants to make informed decisions,” Cordray said. The new appraisal rule goes into effect next January.

In separate action, the CFPB and five other regulatory agencies issued another appraisal rule that lenders must follow in making “higher-priced mortgage loans.”

In originating these nonprime loans, lenders must take precautions to guard against appraisal fraud and property flipping.

In a “higher-priced mortgage loan” transaction, the lender must obtain a written appraisal from a certified or licensed appraiser who conducts an on-site appraisal that includes a walk through the interior of the house.

Lenders must also obtain a second appraisal at no cost to the consumer from a different appraiser if the seller acquired the property at a lower price during the prior six months and the difference in price exceeds certain thresholds. This rule also goes into effect next January.