Vol. 78 Thursday, 

No. 21 January 31, 2013 

Part VI 

Bureau of Consumer Financial Protection 

12 CFR Part 1002 

Disclosure and Delivery Requirements for Copies of Appraisals and Other 

Written Valuations Under the Equal Credit Opportunity Act (Regulation B); 

Final Rule 


tkelley on DSK3SPTVN1PROD with 
7216 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

1 15 U.S.C. 1691 et seq. 

2Public Law 102–242, 105 Stat. 2236 (1991). 

3For additional legislative history on the 

appraisal provision as originally added by the 

FDICIA, see S. Rept.167, 102nd Cong. (1991); S. 

Rept. 461, 101st Cong. (1990); 137 Cong. Rec. S2519 

(daily ed. Feb. 28, 1991); 136 Cong. Rec. S14592, 

14598–99 (daily ed. Oct. 5, 1990). 

4Public Law 111–203, 124 Stat. 1376 (2010). The 

transfer of authority is further discussed in Part IV 

below. 

5For more discussion of the mortgage market, the 

financial crisis, and mortgage origination generally, 

see the Bureau’s 2012 TILA–RESPA Proposal, 77 FR 

51116 (Aug. 23, 2012), available at http:// 

www.consumerfinance.gov/regulations/. 

6Sections 1011 and 1021 of title X of the DoddFrank Act, the ‘‘Consumer Financial Protection 

Act,’’ Public Law 111–203, sections 1001–1100H, 

codified at 12 U.S.C. 5491, 5511. The Consumer 

Financial Protection Act is substantially codified at 

12 U.S.C. 5481–5603. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1002 

[Docket No. CFPB–2012–0032] 

RIN 3170–AA26 

Disclosure and Delivery Requirements 

for Copies of Appraisals and Other 

Written Valuations Under the Equal 

Credit Opportunity Act (Regulation B) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule; official 

interpretations. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

amending Regulation B, which 

implements the Equal Credit 

Opportunity Act (ECOA), and the 

Bureau’s official interpretations of the 

regulation, which interpret and clarify 

the requirements of Regulation B. The 

final rule revises Regulation B to 

implement an ECOA amendment 

concerning appraisals and other 

valuations that was enacted as part of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act). In general, the revisions to 

Regulation B require creditors to 

provide to applicants free copies of all 

appraisals and other written valuations 

developed in connection with an 

application for a loan to be secured by 

a first lien on a dwelling, and require 

creditors to notify applicants in writing 

that copies of appraisals will be 

provided to them promptly. 

DATES: This final rule is effective 

January 18, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Owen Bonheimer, Counsel, or William 

W. Matchneer, Senior Counsel, Office of 

Regulations, at (202) 435–7000. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule 

Congress amended ECOA section 

701(e) to require creditors to provide 

applicants with a copy of appraisals and 

other written valuations developed in 

connection with certain mortgage 

transactions as a matter of course, rather 

than only providing copies of appraisals 

upon applicants’ request as previously 

required. For the reasons discussed 

below, the Bureau is now adopting 

amendments to Regulation B in final 

form, generally as proposed. The final 

rule amends § 1002.14 of Regulation B 

to provide for the following in 

connection with applications for credit 

to be secured by a first lien on a 

dwelling: 

• Require creditors to notify 

applicants within three business days of 

receiving an application of their right to 

receive a copy of appraisals developed. 

• Require creditors to provide 

applicants a copy of each appraisal and 

other written valuation promptly upon 

its completion or three business days 

before consummation (for closed-end 

credit) or account opening (for open-end 

credit), whichever is earlier. 

• Permit applicants to waive the 

timing requirement for providing these 

copies. However, applicants who waive 

the timing requirement must be given a 

copy of all appraisals and other written 

valuations at or prior to consummation 

or account opening, or, if the transaction 

is not consummated or the account is 

not opened, no later than 30 days after 

the creditor determines the transaction 

will not be consummated or the account 

will not be opened. 

• Prohibit creditors from charging for 

the copy of appraisals and other written 

valuations, but permit creditors to 

charge applicants reasonable fees for the 

cost of the appraisals or other written 

valuations unless applicable law 

provides otherwise. 

As discussed further in part VI, this 

final rule becomes effective on January 

18, 2014. Accordingly, the final rule 

applies to mortgage transactions to be 

secured by a first lien on a dwelling for 

which the creditor receives an 

application on or after January 18, 2014. 

II. Background 

A. ECOA and Regulation B 

ECOA 1 makes it unlawful for 

creditors to discriminate in any aspect 

of a credit transaction on the basis of 

sex, race, color, religion, national origin, 

marital status, or age (provided the 

applicant has the capacity to contract), 

or because all or part of an applicant’s 

income derives from public assistance, 

or because the applicant has in good 

faith exercised any right under the 

Consumer Credit Protection Act. ECOA 

applies to consumer credit as well as to 

business and commercial credit except 

as provided in Regulation B, 

§ 1002.3(a)–(d). 

Prior to its amendment by the DoddFrank Act, section 701(e) of ECOA 

required creditors to provide credit 

applicants, upon written request, with 

copies of appraisal reports used in 

connection with their applications for a 

loan secured by residential real 

property. This provision was added to 

ECOA in 1991 as part of the Federal 

Deposit Insurance Corporation 

Improvement Act (FDICIA).2 The Senate 

report on FDICIA suggests that one 

purpose of ECOA section 701(e) was to 

make it easier for loan applicants to 

determine whether a loan was denied 

due to a discriminatory appraisal.3

Section 1474 of the Dodd-Frank Act 

replaces the existing section 701(e) with 

a new provision that imposed several 

new requirements concerning appraisals 

as well as other valuations, as described 

below. The Act also transferred general 

rulemaking authority for ECOA from the 

Board of Governors of the Federal 

Reserve System (Board) to the Bureau 

on July 21, 2011.4 Pursuant to the DoddFrank Act and ECOA, as amended, the 

Bureau published for public comment 

an interim final rule establishing a new 

Regulation B, 12 CFR part 1002, 

implementing ECOA (except with 

respect to persons excluded from the 

Bureau’s rulemaking authority by 

section 1029 of the Dodd-Frank Act). 76 

FR 79442 (Dec. 21, 2011). This interim 

final rule did not impose any new 

substantive obligations but did make 

technical and conforming changes to 

reflect the transfer of authority and 

certain other changes made by the 

Dodd-Frank Act. The Bureau’s 

Regulation B took effect on December 

30, 2011. 

B. Dodd-Frank Act Amendments 

Concerning Appraisals and Other 

Valuations 

Congress enacted the Dodd-Frank Act 

after a cycle of unprecedented 

expansion and contraction in the 

mortgage market sparked the most 

severe U.S. recession since the Great 

Depression.5 The Dodd-Frank Act 

created the Bureau and consolidated 

various rulemaking and supervisory 

authorities in this new agency, 

including the authority to implement 

ECOA.6 At the same time, Congress 

imposed new statutory requirements 

governing mortgage practices with the 

intent to restrict the practices that 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7217 

7See TILA sections 129E and 129H as established 

by Dodd-Frank Act sections 1471 and 1472, 15 

U.S.C. 1639e and 1639h; sections 1124 and 1125 of 

the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (FIRREA) as established 

by Dodd-Frank Act sections 1473(f)(2), 12 U.S.C. 

3353, and 1473(q), 12 U.S.C. 3354; and section 

701(e) of ECOA as amended by Dodd-Frank Act 

section 1474, 15 U.S.C. 1691(e). 

8Public Law 111–203, sec. 1474, 124 Stat. 1376 

(2010). 

9See 77 FR 51116 at 51313–14, 51427 (Aug. 23, 

2012). On July 9, 2012, the Bureau issued for public 

comment a proposed rule and forms combining the 

TILA mortgage loan disclosures with the Real Estate 

Settlement Procedures Act (RESPA) Good Faith 

Estimate (GFE) and settlement statement required 

pursuant to Dodd-Frank Act section 1032(f) as well 

as sections 4(a) of RESPA and 105(b) of TILA, as 

amended by Dodd-Frank Act sections 1098 and 

1100A, respectively (2012 TILA–RESPA Proposal). 

12 U.S.C. 2603(a); 15 U.S.C. 1604(b). 

10 Kleimann Comm. Gp., Inc., Know Before You 

Owe: Evolution of the Integrated TILA–RESPA 

Disclosures (July 9, 2012), available at http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 

11This discussion is limited to testing of the 

disclosure to be provided in connection with a 

consumer’s application, which is the portion of the 

testing relevant to the appraisal-related disclosure 

required under § 1002.14(a)(2). As discussed in the 

supplementary information to the 2012 RESPATILA Proposal, the Bureau and Kleimann also 

tested prototype designs for the integrated 

disclosure forms to be provided in connection with 

the closing of the mortgage loan and real estate 

transaction. See the Bureau’s 2012 TILA-RESPA 

Proposal, available at http:// 

www.consumerfinance.gov/regulations/. 

contributed to the crisis and to provide 

additional protections to consumers. 

Sections 1471 through 1474 of the 

Dodd-Frank Act established a number of 

new requirements for appraisal and 

other valuation activities, including 

requirements relating to appraisal 

independence, appraisals for higher-risk 

mortgages, regulation of appraisal 

management companies, automated 

valuation models (AVMs), and 

providing copies of appraisals and other 

written valuations.7 Many of the DoddFrank Act appraisal provisions are 

required to be implemented through 

joint rulemakings involving the Bureau 

and other Federal agencies. The 

amendment to ECOA section 701(e), 

however, does not require a joint 

rulemaking. As discussed below, the 

amendments to section 701(e) overlap 

with the disclosure and appraisal copy 

requirements of a Dodd-Frank Act 

amendment to the Truth in Lending Act 

(TILA) applicable to higher-risk 

mortgages. That Dodd-Frank Act 

amendment to TILA, which adds TILA 

section 129H, is required to be 

implemented through joint rulemaking. 

See TILA section 129H(b)(4)(A); 15 

U.S.C. 1639h(b)(4)(A). 

ECOA Requirements Relating to 

Appraisals and Other Valuations 

Section 1474 of the Dodd-Frank Act 8

amended ECOA section 701(e) to 

require that creditors provide copies of 

all appraisals and other written 

valuations to loan applicants, in credit 

transactions to be secured by a first lien 

on a dwelling, at no additional cost and 

without requiring applicants to request 

such copies affirmatively. Amended 

ECOA section 701(e) generally provides 

that: 

• A creditor shall furnish to an 

applicant a copy of any and all 

appraisals and other written valuations 

developed in connection with the 

applicant’s application for a loan that is 

or would be secured by a first lien on 

a dwelling. The copy must be provided 

promptly upon completion, and in no 

case later than three days prior to 

closing of the loan, whether the creditor 

grants or denies the applicant’s request 

for credit or the application is 

incomplete or withdrawn. However, the 

applicant may waive the timing 

requirement that copies of such 

appraisals or other valuations be 

provided three days prior to closing, 

except where otherwise required by law. 

• The creditor shall provide a copy of 

each appraisal or other written 

valuation at no additional cost to the 

applicant, though the creditor may 

impose a reasonable fee on the applicant 

to reimburse the creditor for the cost of 

the appraisal. 

• At the time of application, the 

creditor shall notify applicants in 

writing of the right to receive a copy of 

each appraisal and other written 

valuation under ECOA section 701(e). 

Amended ECOA section 701(e)(6) 

defines the term ‘‘valuation’’ as 

including ‘‘any estimate of the value of 

a dwelling developed in connection 

with a creditor’s decision to provide 

credit, including those values developed 

pursuant to a policy of a government 

sponsored enterprise or by an 

automated valuation model, a broker 

price opinion, or other methodology or 

mechanism.’’ 

Higher-Risk Mortgage Appraisal 

Requirements 

On August 15, 2012, the Bureau— 

along with the Board, the Federal 

Deposit Insurance Corporation (FDIC), 

the Federal Housing Finance Agency 

(FHFA), the National Credit Union 

Administration (NCUA), and the Office 

of the Comptroller of the Currency 

(OCC)—jointly issued for public 

comment a proposal to implement new 

section 129H of TILA relating to 

appraisals for higher-risk mortgages 

(2012 Interagency Appraisals Proposal). 

The proposal was published in the 

Federal Register on September 5, 2012. 

See 77 FR 54722 (Sept. 5, 2012). TILA 

section 129H includes certain 

requirements that are similar to ECOA 

section 701(e). Under Section 129H(d), 

creditors must provide applicants, at 

least three days prior to closing, a copy 

of any appraisal prepared in connection 

with a higher-risk mortgage. 15 U.S.C. 

1639h(c). Creditors also must provide 

applicants, at the time of the initial 

mortgage application, a statement that 

any appraisal prepared for the mortgage 

is for the creditor’s sole use and that the 

consumer may choose to have a separate 

appraisal conducted at his or her own 

expense. Id. 1639h(d). Section 1471 of 

the Dodd-Frank Act defines the term 

‘‘higher-risk mortgage’’ generally as a 

residential mortgage loan, other than a 

reverse mortgage, that is secured by a 

principal dwelling with an annual 

percentage rate (APR) that exceeds the 

average prime offer rate for a 

comparable transaction by specified 

percentages. Id. 1639h(f). To finalize the 

2012 Interagency Appraisals Proposal 

described above, the inter-agency group 

is issuing a final rule under section 

129H of TILA (2103 Interagency 

Appraisals Final Rule). 

III. Summary of the Rulemaking 

Process 

A. Pre-Proposal Testing and Outreach 

The Bureau has conducted consumer 

testing relating to implementation of 

ECOA section 701(e) requirements in 

conjunction with its 2012 TILA–RESPA 

Proposal.9 A more detailed discussion 

of the Bureau’s overall testing and form 

design can be found in the report Know 

Before You Owe: Evolution of the 

Integrated TILA–RESPA Disclosures, 

which is available on the Bureau’s Web 

site.10

In January 2011, the Bureau 

contracted with a communication, 

design, consumer testing, and research 

firm, Kleimann Communication Group, 

Inc. (Kleimann), which specializes in 

consumer financial disclosures. The 

Bureau and Kleimann developed a plan 

to conduct qualitative usability testing, 

consisting of one-on-one cognitive 

interviews, over several iterations of 

prototype integrated disclosure forms. 

Between January and May 2011, the 

Bureau and Kleimann worked 

collaboratively on developing a 

qualitative testing plan, and several 

prototype integrated forms for the 

disclosure to be provided in connection 

with a consumer’s application (i.e., a 

form integrating the RESPA good faith 

estimate and the early TILA 

disclosure).11 The qualitative testing 

plan developed by the Bureau and 

Kleimann was unique with respect to 

qualitative testing performed by other 


tkelley on DSK3SPTVN1PROD with 
7218 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

12See http://www.consumerfinance.gov/ 

knowbeforeyouowe. 

13 Kleimann Comm. Gp., Inc., Know Before You 

Owe: Evolution of the Integrated TILA–RESPA 

Disclosures 254–256 (July 9, 2012), available at 

http://files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 14 Id. 15 76 FR 27390 (May 11, 2011). 

federal agencies in that the Bureau 

planned to conduct qualitative testing 

with industry participants as well as 

consumers. Each round of qualitative 

testing included at least two industry 

participants, including lenders from 

several different types of depository 

(including credit unions) and 

nondepository institutions, mortgage 

brokers, and closing agents. 

In addition, the Bureau launched an 

initiative to obtain public feedback on 

each round of prototype disclosures at 

the same time as it conducted the 

qualitative testing of the prototypes, 

which it titled ‘‘Know Before You 

Owe.’’ 12 This initiative consisted of 

publishing and obtaining feedback on 

the prototype designs through an 

interactive tool on the Bureau’s Web site 

or through posting the prototypes to the 

Bureau’s blog on its Web site and 

providing an opportunity for the public 

to email feedback directly to the Bureau. 

From May to October 2011, Kleimann 

and the Bureau conducted a series of 

five rounds of qualitative testing on 

revised iterations of integrated 

disclosure prototype forms. This testing 

was conducted in five different cities 

across different U.S. Census regions and 

divisions: Baltimore, Maryland; Los 

Angeles, California; Chicago, Illinois; 

Springfield, Massachusetts; and 

Albuquerque, New Mexico. After each 

round, Kleimann analyzed and reported 

to the Bureau on the results of the 

testing. Based on these results and 

feedback received from the Bureau’s 

Know Before You Owe public outreach 

project, the Bureau revised the 

prototype disclosure forms for the next 

round of testing. 

As part of the larger Know Before You 

Owe public outreach project, the Bureau 

tested two versions of the new 

appraisal-related disclosures required 

by both TILA section 129H and ECOA 

section 701(e).13 The Bureau believed 

that it was important to test the TILA 

and ECOA appraisal-related disclosures 

together, in an integrated manner, to 

determine how to provide these 

overlapping but separate disclosures in 

a manner that would minimize 

consumer confusion and improve 

consumer comprehension. Testing of 

the first version showed that consumers 

tended to find the TILA and ECOA 

disclosures confusing when they were 

given together using the specific 

language set forth in the respective 

statutes.14 Consumer comprehension 

improved when the Bureau developed a 

slightly longer plain language version 

that was designed to incorporate the 

elements of both statutes. Based on the 

results of that testing, the Bureau 

developed the following appraisal 

disclosure language: ‘‘We may order an 

appraisal to determine the property’s 

value and charge you for this appraisal. 

We will promptly give you a copy of 

any appraisal, even if your loan does not 

close. You can pay for an additional 

appraisal for your own use at your own 

cost.’’ The Bureau included this 

language in the prototype form used in 

the final rounds of the testing process. 

In addition, as part of the rulemaking 

process for this rule, as described in the 

proposal, 77 FR 53090, at 50400 n.39, 

50402 n.48 (Aug. 21, 2012), the Bureau 

considered information obtained during 

pre-proposal outreach to industry 

regarding its practices in providing 

copies of written appraisals to 

applicants. This outreach was carried 

out in the context of the development of 

the 2012 Interagency Appraisals 

Proposal and involved a large bank, a 

trade group of smaller depository 

institutions, and an independent 

mortgage bank (IMB). 

B. The Bureau’s 2012 ECOA Proposal on 

Providing Copies of Appraisals and 

Other Written Valuations 

The Bureau issued for public 

comment its proposal to amend 

Regulation B to implement the DoddFrank Act amendment to ECOA section 

701(e) on August 15, 2012. The proposal 

was published in the Federal Register 

on August 21, 2012. 77 FR 50390 (Aug. 

21, 2012). The Bureau proposed to 

amend Regulation B, § 1002.14(a)(1), to 

set forth a general requirement that 

creditors provide applicants for credit to 

be secured by a first lien on a dwelling 

with copies of all appraisals and other 

written valuations developed in 

connection with their applications. The 

Bureau further proposed timing 

requirements for providing such copies 

and standards governing any waiver of 

the timing requirements. The Bureau 

proposed to amend § 1002.14(a)(2) to 

require that a creditor provide a written 

disclosure of the applicant’s right to 

receive a copy of such appraisals and 

other written valuations. As proposed, 

§ 1002.14(a)(3) would have prohibited 

creditors from charging the applicants 

for providing a copy of appraisals and 

other written valuations, but would 

have permitted creditors to require 

applicants to pay a reasonable fee to 

reimburse the creditor for the cost of 

appraisals and other written valuations. 

The Bureau proposed in § 1002.14(a)(4) 

to clarify that the requirements of 

§ 1002.14(a)(1) would apply regardless 

of whether credit is extended or denied, 

or if the application is incomplete or 

withdrawn. The Bureau proposed in 

§ 1002.14(a)(5) to allow the copies of 

appraisals and other written valuations 

required by § 1002.14(a)(1) to be 

provided in electronic form. As is 

discussed in more detail below, 

proposed § 1002.14(b) would have 

defined certain terms used in 

§ 1002.14(a). 

C. Overview of Comments Received 

The Bureau received 68 comments on 

the 2012 ECOA Proposal, primarily from 

creditors and their representatives. Most 

of the industry commenters generally 

supported the core elements of the 

proposal, while providing suggestions 

for exemptions, clarifications, or 

changes to particular elements of the 

proposal. Comment letters also were 

submitted by a group advocating for the 

use of plain language, and on behalf of 

appraisers, government-sponsored 

enterprises (GSEs), and real estate 

agents, as well as an affordable housing 

advocacy group. The affordable housing 

advocacy group commenter generally 

supported the proposal and suggested 

changes to strengthen consumer 

protections. The plain language group 

commenter suggested changes to make 

the rule easier to understand. Most of 

the remaining commenters generally 

supported the rule but suggested 

clarifications and changes to particular 

elements of the proposal. The comments 

are discussed in more detail in the 

section-by-section analysis below. 

D. Other Rulemakings 

In addition to this final rule and the 

2013 Interagency Appraisals Final Rule 

described above, the Bureau currently is 

adopting several other final rules and 

issuing one proposal, all relating to 

mortgage credit to implement 

requirements of title XIV of the DoddFrank Act. Each of the final rules 

follows a proposal issued in 2011 by the 

Board or in 2012 by the Bureau. 

Collectively, these proposed and final 

rules are referred to as the Title XIV 

Rulemakings. 

• Ability to Repay: The Bureau is 

finalizing a rule, following a May 2011 

proposal issued by the Board (Board’s 

2011 ATR Proposal),15 to implement 

provisions of the Dodd-Frank Act (1) 

requiring creditors to determine that a 

consumer has a reasonable ability to 

repay covered mortgage loans and 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7219 

16 76 FR 11598 (Mar. 2, 2011). 

17 77 FR 49090 (Aug. 15,2012). 

18 77 FR 57200 (Sept. 17, 2012) (RESPA); 77 FR 

57318 (Sept. 17, 2012) (TILA). 

19 77 FR 55272 (Sept. 7, 2012). 

20 77 FR 51116 (Aug. 23, 2012). 

21 77 FR 70105 (Nov. 23, 2012). 

establishing standards for compliance, 

such as by making a ‘‘qualified 

mortgage,’’ and (2) establishing certain 

limitations on prepayment penalties, 

pursuant to TILA section 129C as 

established by Dodd-Frank Act sections 

1411, 1412, and 1414. 15 U.S.C. 1639c. 

The Bureau’s final rule is referred to as 

the 2013 ATR Final Rule. 

Simultaneously with the 2013 ATR 

Final Rule, the Bureau is issuing a 

proposal to amend the final rule 

implementing the ability-to-repay 

requirements, including by the addition 

of exemptions for certain nonprofit 

creditors and certain homeownership 

stabilization programs and a definition 

of a ‘‘qualified mortgage’’ for certain 

loans made and held in portfolio by 

small creditors (2013 ATR Concurrent 

Proposal). The Bureau expects to act on 

the 2013 ATR Concurrent Proposal on 

an expedited basis, so that any 

exceptions or adjustments to the 2013 

ATR Final Rule can take effect 

simultaneously with that rule. 

• Escrows: The Bureau is finalizing a 

rule, following a March 2011 proposal 

issued by the Board (Board’s 2011 

Escrows Proposal),16 to implement 

certain provisions of the Dodd-Frank 

Act expanding on existing rules that 

require escrow accounts to be 

established for higher-priced mortgage 

loans and creating an exemption for 

certain loans held by creditors operating 

predominantly in rural or underserved 

areas, pursuant to TILA section 129D as 

established by Dodd-Frank Act section 

1461. 15 U.S.C. 1639d. The Bureau’s 

final rule is referred to as the 2013 

Escrows Final Rule. 

• HOEPA: Following its July 2012 

proposal (2012 HOEPA Proposal),17 the 

Bureau is issuing a final rule to 

implement Dodd-Frank Act 

requirements expanding protections for 

‘‘high-cost mortgages’’ under the 

Homeownership and Equity Protection 

Act (HOEPA), pursuant to TILA sections 

103(bb) and 129, as amended by DoddFrank Act sections 1431 through 1433. 

15 U.S.C. 1602(bb) and 1639. The 

Bureau also is finalizing rules to 

implement certain title XIV 

requirements concerning 

homeownership counseling, including a 

requirement that lenders provide lists of 

homeownership counselors to 

applicants for federally-related mortgage 

loans, pursuant to RESPA section 5(c), 

as amended by Dodd-Frank Act section 

1450. 12 U.S.C. 2604(c). The Bureau’s 

final rule is referred to as the 2013 

HOEPA Final Rule. 

• Servicing: Following its August 

2012 proposals (2012 RESPA Servicing 

Proposal and 2012 TILA Servicing 

Proposal),18 the Bureau is adopting final 

rules to implement Dodd-Frank Act 

requirements regarding force-placed 

insurance, error resolution, information 

requests, and payment crediting, as well 

as requirements for mortgage loan 

periodic statements and adjustable-rate 

mortgage reset disclosures, pursuant to 

section 6 of RESPA and sections 128, 

128A, 129F, and 129G of TILA, as 

amended or established by Dodd-Frank 

Act sections 1418, 1420, 1463, and 

1464. 12 U.S.C. 2605; 15 U.S.C. 1638, 

1638a, 1639f, and 1639g. The Bureau 

also is finalizing rules on early 

intervention for troubled and delinquent 

borrowers, and loss mitigation 

procedures, pursuant to the Bureau’s 

authority under section 6 of RESPA, as 

amended by Dodd-Frank Act section 

1463, to establish obligations for 

mortgage servicers that it finds to be 

appropriate to carry out the consumer 

protection purposes of RESPA, and its 

authority under section 19(a) of RESPA 

to prescribe rules necessary to achieve 

the purposes of RESPA. The Bureau’s 

final rule under RESPA with respect to 

mortgage servicing also establishes 

requirements for general servicing 

standards policies and procedures and 

continuity of contact pursuant to its 

authority under section 19(a) of RESPA. 

The Bureau’s final rules are referred to 

as the 2013 RESPA Servicing Final Rule 

and the 2013 TILA Servicing Final Rule, 

respectively. 

• Loan Originator Compensation: 

Following its August 2012 proposal 

(2012 Loan Originator Proposal),19 the 

Bureau is issuing a final rule to 

implement provisions of the DoddFrank Act requiring certain creditors 

and loan originators to meet certain 

duties of care, including qualification 

requirements; requiring the 

establishment of certain compliance 

procedures by depository institutions; 

prohibiting loan originators, creditors, 

and the affiliates of both from receiving 

compensation in various forms 

(including based on the terms of the 

transaction) and from sources other than 

the consumer, with specified 

exceptions; and establishing restrictions 

on mandatory arbitration and financing 

of single-premium credit insurance, 

pursuant to TILA sections 129B and 

129C as established by Dodd-Frank Act 

sections 1402, 1403, and 1414(a). 15 

U.S.C. 1639b, 1639c. The Bureau’s final 

rule is referred to as the 2013 Loan 

Originator Final Rule. 

The Bureau is not at this time 

finalizing proposals concerning various 

disclosure requirements that were 

added by title XIV of the Dodd-Frank 

Act, integration of mortgage disclosures 

under TILA and RESPA, or a simpler, 

more inclusive definition of the finance 

charge for purposes of disclosures for 

closed-end mortgage transactions under 

Regulation Z. The Bureau expects to 

finalize these proposals and to consider 

whether to adjust regulatory thresholds 

under the Title XIV Rulemakings in 

connection with any change in the 

calculation of the finance charge later in 

2013, after it has completed quantitative 

testing, and any additional qualitative 

testing deemed appropriate, of the forms 

that it proposed in July 2012 to combine 

TILA mortgage disclosures with the 

good faith estimate (RESPA GFE) and 

settlement statement (RESPA settlement 

statement) required under RESPA, 

pursuant to Dodd-Frank Act section 

1032(f) and sections 4(a) of RESPA and 

105(b) of TILA, as amended by DoddFrank Act sections 1098 and 1100A, 

respectively (2012 TILA–RESPA 

Proposal).20 Accordingly, the Bureau 

already has issued a final rule delaying 

implementation of various affected title 

XIV disclosure provisions.21 The 

Bureau’s approach to coordinating the 

implementation of the Title XIV 

Rulemakings is discussed below. 

Coordinated Implementation of Title 

XIV Rulemakings 

As noted in all of its foregoing 

proposals, the Bureau regards each of 

the Title XIV Rulemakings as affecting 

aspects of the mortgage industry and its 

regulations. Accordingly, as noted in its 

proposals, the Bureau is coordinating 

carefully the Title XIV Rulemakings, 

particularly with respect to their 

effective dates. The Dodd-Frank Act 

requirements to be implemented by the 

Title XIV Rulemakings generally will 

take effect on January 21, 2013, unless 

final rules implementing those 

requirements are issued on or before 

that date and provide for a different 

effective date. See Dodd-Frank Act 

section 1400(c), 15 U.S.C. 1601 note. In 

addition, some of the Title XIV 

Rulemakings are to take effect no later 

than one year after they are issued. Id. 

The comments on the appropriate 

implementation date for this final rule 

are discussed in detail below in part VI 

of this notice. In general, however, 

consumer advocates requested that the 

Bureau put the protections in the Title 


tkelley on DSK3SPTVN1PROD with 
7220 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

22Of the several final rules being adopted under 

the Title XIV Rulemakings, six entail amendments 

to Regulation Z, with the only exceptions being the 

2013 RESPA Servicing Final Rule (Regulation X) 

and the 2013 ECOA Appraisals Final Rule 

(Regulation B); the 2013 HOEPA Final Rule also 

amends Regulation X, in addition to Regulation Z. 

The six Regulation Z final rules involve numerous 

instances of intersecting provisions, either by crossreferences to each other’s provisions or by adopting 

parallel provisions. Thus, adopting some of those 

amendments without also adopting certain other, 

closely-related provisions would create significant 

technical issues, e.g., new provisions containing 

cross-references to other provisions that do not yet 

exist, which could undermine the ability of 

creditors and other parties subject to the rules to 

understand their obligations and implement 

appropriate systems changes in an integrated and 

efficient manner. 

23Public Law 111–203, sec. 1061(b)(7), 124 Stat. 

1376; 12 U.S.C. 5581(b)(7). 

24 12 U.S.C. 5581(a)(1). 

25 Dodd-Frank Act section 1002(14), 12 U.S.C. 

5481(14) (defining ‘‘Federal consumer financial 

law’’ to include the ‘‘enumerated consumer laws’’ 

and the provisions of title X of the Dodd-Frank Act); 

Dodd-Frank Act section 1002(12), 12 U.S.C. 

5481(12) (defining ‘‘enumerated consumer laws’’ to 

include ECOA). 

XIV Rulemakings into effect as soon as 

practicable. In contrast, the Bureau 

received some industry comments 

indicating that implementing so many 

new requirements at the same time 

would create a significant cumulative 

burden for creditors. In addition, many 

commenters also acknowledged the 

advantages of implementing multiple 

revisions to the regulations in a 

coordinated fashion.22 Thus, a tension 

exists between coordinating the 

adoption of the Title XIV Rulemakings 

and facilitating industry’s 

implementation of such a large set of 

new requirements. Some have suggested 

that the Bureau resolve this tension by 

adopting a sequenced implementation, 

while others have requested that the 

Bureau simply provide a longer 

implementation period for all of the 

final rules. 

The Bureau recognizes that many of 

the new provisions will require 

creditors to make changes to automated 

systems and, further, that most 

administrators of large systems are 

reluctant to make too many changes to 

their systems at once. At the same time, 

however, the Bureau notes that the 

Dodd-Frank Act established virtually all 

of these changes to institutions’ 

compliance responsibilities, and 

contemplated that they be implemented 

in a relatively short period of time. And, 

as already noted, the extent of 

interaction among many of the Title XIV 

Rulemakings necessitates that many of 

their provisions take effect together. 

Finally, notwithstanding commenters’ 

expressed concerns for cumulative 

burden, the Bureau expects that 

creditors actually may realize some 

efficiencies from adapting their systems 

for compliance with multiple new, 

closely-related requirements at once, 

especially if given sufficient overall 

time to do so. 

Accordingly, the Bureau is requiring 

that, as a general matter, creditors and 

other affected persons begin complying 

with the final rules on January 10, 2014. 

As noted above, section 1400(c) of the 

Dodd-Frank Act requires that some 

provisions of the Title XIV Rulemakings 

take effect no later than one year after 

the Bureau issues them. Accordingly, 

the Bureau is establishing January 10, 

2014, one year after issuance of the 

Bureau’s 2013 ATR, Escrows, and 

HOEPA Final Rules (i.e., the earliest of 

the title XIV final rules), as the baseline 

effective date for most of the Title XIV 

Rulemakings. The Bureau believes that, 

on balance, this approach will facilitate 

the implementation of the rules’ 

overlapping provisions, while also 

affording creditors sufficient time to 

implement the more complex or 

resource-intensive new requirements. 

As discussed in part VI below, however, 

the effective date of this final rule is 

January 18, 2014, to align with the 

effective date of the 2013 Interagency 

Appraisals Final Rule. 

The Bureau has identified certain 

rulemakings or selected aspects thereof, 

however, that do not present significant 

implementation burdens for industry. 

Accordingly, the Bureau is setting 

earlier effective dates for those final 

rules or certain aspects thereof, as 

applicable. Those effective dates are set 

forth and explained in the Federal 

Register notices for those final rules. 

IV. Legal Authority 

The final rule was issued on January 

18, 2013, in accordance with 12 CFR 

1074.1. The Bureau issued this final rule 

pursuant to its authority under ECOA 

and the Dodd-Frank Act. On July 21, 

2011, section 1061 of the Dodd-Frank 

Act transferred to the Bureau all of the 

‘‘consumer financial protection 

functions’’ previously vested in certain 

other Federal agencies, including the 

Board.23 The term ‘‘consumer financial 

protection functions’’ is defined to 

include ‘‘all authority to prescribe rules 

or issue orders or guidelines pursuant to 

any Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 24

ECOA is a Federal consumer financial 

law.25 Accordingly, the Bureau has 

authority to issue regulations pursuant 

to ECOA. 

Section 703(a) of ECOA authorizes the 

Bureau to prescribe regulations to carry 

out the purposes of ECOA. Section 

703(a) further states that such 

regulations may contain—but are not 

limited to—such classifications, 

differentiation, or other provision, and 

may provide for such adjustments and 

exceptions for any class of transactions 

as, in the judgment of the Bureau, are 

necessary or proper to effectuate the 

purposes of ECOA, to prevent 

circumvention or evasion thereof, or to 

facilitate or substantiate compliance. 15 

U.S.C. 1691b(a). 

Section 1022(b)(1) of the Dodd-Frank 

Act authorizes the Bureau to prescribe 

rules ‘‘as may be necessary or 

appropriate to enable the Bureau to 

administer and carry out the purposes 

and objectives of the Federal consumer 

financial laws, and to prevent evasions 

thereof[.]’’ 12 U.S.C. 5512(b)(1). ECOA 

and title X of the Dodd-Frank Act are 

Federal consumer financial laws. 

Accordingly, the Bureau is exercising its 

authority under Dodd-Frank Act section 

1022(b)(1) to prescribe rules that carry 

out the purposes and objectives of 

ECOA and title X and prevent evasion 

of those laws. 

Section 1405(b) of the Dodd-Frank 

Act provides that, ‘‘[n]otwithstanding 

any other provision of [title XIV of the 

Dodd-Frank Act], in order to improve 

consumer awareness and understanding 

of transactions involving residential 

mortgage loans through the use of 

disclosures, the [Bureau] may, by rule, 

exempt from or modify disclosure 

requirements, in whole or in part, for 

any class of residential mortgage loans 

if the [Bureau] determines that such 

exemption or modification is in the 

interest of consumers and in the public 

interest.’’ 15 U.S.C. 1601 note. Section 

1401 of the Dodd-Frank Act, which 

amended TILA section 103(cc), 15 

U.S.C. 1602(cc), generally defines 

residential mortgage loan as any 

consumer credit transaction that is 

secured by a mortgage on a dwelling or 

on residential real property that 

includes a dwelling other than an openend credit plan or an extension of credit 

secured by a consumer’s interest in a 

timeshare plan. Notably, the authority 

granted by section 1405(b) applies to 

‘‘disclosure requirements’’ generally, 

and is not limited to a specific statute 

or statutes. 

V. Section-by-Section Analysis 

Section 1002.14 Rules on Providing 

Copies of Appraisals and Other Written 

Valuations 

Overview 

Public comments generally. Many 

commenters offered general support for 

the proposed rule, with some 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7221 

comments, for example by a large trade 

association for real estate brokers and 

agents, offering strong support for its 

potential to educate and inform 

consumers about appraisals and other 

valuations and their role in the real 

estate transaction. Most of the industry 

commenters generally supported the 

proposal and provided numerous 

suggestions for clarifications or changes 

to particular elements of the proposal, 

which are discussed in the 

corresponding sections below. Some 

industry commenters including 

community banks and other lending 

institutions, however, opposed the 

proposal. These comments stated, for 

example, that the mortgage credit 

industry cannot keep up with the all the 

regulations being issued under the 

Dodd-Frank Act and that rules requiring 

creditors to provide copies of appraisals 

are already in place. 

Discussion. As discussed above, the 

Dodd-Frank Act amendments to ECOA 

section 701(e) will take effect 18 months 

after the designated transfer date under 

the Dodd-Frank Act unless final rules 

implementing section 701(e) are issued 

on or before that date and provide for 

a different effective date. For that 

reason, the Bureau believes that, rather 

than adding burden to industry, this 

final regulation will relieve industry of 

uncertainty and potential liability risk 

that would likely result from ECOA 

section 701(e) taking effect without an 

implementing regulation. Furthermore, 

by issuing this final rule the Bureau is 

able to provide industry with additional 

time to develop new policies, train 

employees, and make system changes to 

implement the rule’s requirements that 

would not be available if the statute 

takes effect in January 2013. 

4(d) General Rules on Providing 

Disclosure in Electronic Form 

As discussed in the section-by-section 

analysis relating to § 1002.14(a)(5), the 

Bureau is updating the cross-reference 

in § 1002.4(d) to § 1002.14, to reflect 

that the new disclosure requirement is 

cited as § 1002.14(a)(2), rather than 

§ 1002.14(a)(2)(i). This change will 

ensure that electronic disclosure 

standards in Regulation B apply to the 

new notice required by § 1002.14(a)(2) 

to the same extent as they have applied 

to the existing notice required by 

§ 1002.14(a)(2)(i) that the new notice 

will replace. 

14(a) Providing Copies of Appraisals 

and Other Written Valuations 

14(a)(1) In General 

ECOA section 701(e)(1) requires a 

creditor to provide an applicant a copy 

of all appraisals and other written 

valuations developed in connection 

with an application for credit that is to 

be secured by a first lien on a dwelling. 

This requirement replaced the previous 

requirement in section 701(e) to provide 

copies of appraisal reports upon request 

of the applicant for a loan secured by a 

lien on a dwelling. Accordingly, the 

Bureau proposed to revise 

§ 1002.14(a)(1) in two important ways: 

to specify the types of materials that 

must be provided to consumers (i.e., 

copies of appraisals and other written 

valuations developed in connection 

with the application), and to specify the 

types of transactions for which these 

copies must be provided (i.e., 

applications for credit to be secured by 

a first lien on a dwelling). 

First, consistent with new ECOA 

section 701(e)(1), the Bureau proposed 

broadening the scope of the valuation 

materials for which copies must be 

provided to applicants under 

§ 1002.14(a)(1) to include copies of ‘‘all 

written appraisals and valuations 

developed.’’ The Bureau further 

proposed new comment 14(a)(1)–3 to 

clarify that for purposes of § 1002.14, a 

‘‘written’’ appraisal or other valuation 

would include, without limitation, an 

appraisal or valuation received or 

developed by the creditor in any of the 

following manners: in paper form (hard 

copy); electronically, such as by CD or 

email; or by any other similar media. In 

addition, the proposed comment would 

have clarified that creditors should look 

to § 1002.14(a)(5) regarding the 

provision of copies of appraisals and 

other written valuations to applicants 

via electronic means. 

Second, the Dodd-Frank Act 

amendments to ECOA section 701(e) 

also narrowed the types of transactions 

that are covered to ‘‘first lien’’ 

transactions. Accordingly, the Bureau 

proposed revising § 1002.14(a)(1) to add 

the word ‘‘first’’ to narrow the scope of 

the final rule to cover only loans to be 

secured by a first lien on a dwelling. 

The Bureau also proposed changes to 

the Regulation B commentary further 

clarifying the types of transactions 

subject to the requirement to deliver 

copies of appraisals and other written 

valuations. Prior to this final rule, 

comments 14(a)–1 and 2 had clarified 

that Regulation B appraisal delivery 

requirements applied to credit for 

business purposes and to renewals of 

credit secured by a dwelling. The 

Bureau proposed generally retaining 

these comments (renumbered as 

comments 14(a)(1)–1 and 2), with 

several conforming and technical 

changes. The Bureau proposed comment 

14(a)(1)–1 to clarify that § 1002.14(a)(1) 

covers applications for credit to be 

secured by a first lien on a dwelling, as 

the term ‘‘dwelling’’ is defined in 

§ 1002.14(b)(2), whether the credit is 

business credit (see § 1002.2(g)) or 

consumer credit (see § 1002.2(h)). The 

Bureau also proposed comment 

14(a)(1)–2 to clarify that § 1002.14(a)(1) 

applies when an applicant requests the 

renewal of an existing extension of 

credit and the creditor develops a new 

appraisal or other written valuation. 

Consequently, the Bureau proposed that 

this comment clarify that § 1002.14(a) 

does not apply when a creditor uses the 

appraisals or other valuations that were 

previously developed in connection 

with the prior extension of credit in 

order to evaluate the renewal request. 

Public comment. Many commenters 

provided suggestions on which types of 

documents would qualify as appraisals 

or other written valuations copies of 

which must be provided to applicants. 

A significant number of industry 

commenters urged the Bureau to require 

creditors to provide only ‘‘final’’ 

versions of appraisals and other written 

valuations, to prevent uncertainty over 

whether creditors would be required to 

provide copies of drafts or preliminary 

versions of these documents. 

Commenters also suggested this 

clarification would help to reduce the 

volume of information that must be 

provided to and received by applicants, 

thereby reducing burden on creditors 

and preventing consumer confusion. 

Several industry commenters asked 

the Bureau to clarify that ECOA only 

requires providing copies of appraisals 

or other written valuations that are 

actually performed. In addition, a few 

industry commenters suggested that the 

Bureau require providing copies of only 

those appraisals and other written 

valuations that are used or relied upon 

by the creditor in making the credit 

decision. This narrower focus was 

viewed as more in line with the purpose 

of ECOA. One commenter requested that 

creditors should not be required to 

provide a copy of an appraisal or other 

written valuation that is ‘‘materially 

deficient,’’ as it could confuse the 

consumer. 

Some industry commenters expressed 

a general concern over liability risks 

raised by the proposed requirement to 

provide copies of appraisals and other 

written valuations. These commenters 

suggested that providing these copies to 

applicants could create liability risks for 

creditors and preparers. Some creditors 

and a creditor trade association 

expressed concern that applicants might 

view valuations that lenders conduct inhouse, without commissioning an 

appraisal, as warranting the value of the 


tkelley on DSK3SPTVN1PROD with 
7222 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

26Other comments on § 1002.14(a)(1) relate to 

timing and waiver, and are discussed further below. 

27Other industry commenters suggested that 

consumers would not benefit from receiving copies 

of valuations that were not used, and which may 

contain errors or even material deficiencies. The 

statute does not distinguish, however, between 

valuations that are used and those that are not used. 

28Congress has spelled out the conduct that gives 

rise to liability under ECOA. 15 U.S.C. 1691e. 

Creditors that ‘‘fail[] to comply with any 

requirement imposed under [ECOA] shall be liable 

to the aggrieved applicant.’’ 15 U.S.C. 1691e(a). 

29As to whether USPAP will require that 

appraisals list applicants as intended users of 

home. Two creditors and a creditor 

association in one state expressed 

concern over the potential for lender 

liability to carry over to investors under 

an assignee liability theory, which could 

reduce access to credit by reducing 

investor demand. Other industry 

commenters suggested that applicants 

might seek to hold an appraiser liable 

for the applicant’s reliance upon the 

appraisal in entering into a transaction, 

particularly if the appraiser lists, or is 

required to list, the applicant as an 

‘‘intended user’’ of the appraisal under 

the Uniform Standards of Professional 

Appraisal Practices (USPAP). Some of 

these commenters raised these concerns 

over potential liability as part of an 

overall concern with the potential 

burden of the regulation, and some 

urged the Bureau to include provisions 

in the final rule protecting creditors and 

preparers of appraisals and other 

valuations against liability. 

A number of commenters also urged 

the Bureau to exclude certain types of 

transactions from the scope of the final 

rule. Several industry group 

commenters requested that the Bureau 

exempt loan modifications, loss 

mitigation, short sales, and deed-in-lieu 

transactions from the rule’s 

requirements altogether. These 

commenters suggested that these 

transactions did not involve an 

‘‘application’’ by the consumer for an 

‘‘extension of credit’’ within the 

meaning of ECOA. They also argued that 

applying the rule to loss mitigation and 

other foreclosure alternatives would 

increase the costs of these transactions 

and decrease their availability to 

consumers. One industry commenter 

also suggested that the Bureau clarify 

that a loan modification did not fit 

within the type of transaction the rule 

would cover, because a modification 

does not lead to ‘‘consummation’’ of the 

loan. 

In addition, an industry commenter 

requested clarification on whether the 

rule applies to an annual renewal clause 

under which a creditor makes a 

unilateral decision each year whether or 

not to renew a line of credit. Another 

industry trade association requested that 

the final rule exclude temporary loans, 

such as bridge or construction loans, 

which it argued are treated specially 

under other statutes such as RESPA and 

TILA. For construction loans, this 

commenter also asserted that applicants 

are more interested in receiving copies 

of valuations when the permanent 

financing begins, after the construction 

is complete and therefore factored into 

the valuation. 

One commenter suggested that the 

rule should cover second liens to 

protect consumers in these transactions. 

This commenter asserted second lien 

transactions generally carry higher risk 

than first lien transactions, and 

therefore are even more worthy of the 

protections in the rule. 

Discussion. The final rule adopts the 

language in § 1002.14(a)(1) discussed 

above as proposed, with a minor 

clarification. To clarify that an appraisal 

is intended to be classified as a type of 

‘‘valuation’’ under the final rule, and to 

clarify that the rule applies to written 

valuations, the final rule uniformly 

adopts the phrases ‘‘appraisals and 

other written valuations’’ and 

‘‘appraisals or other written valuations.’’ 

This usage also aligns with the use of 

the term ‘‘valuation’’ to include 

appraisals in recent amendments to 

Regulation Z, § 1026.42(b)(3), to 

implement section 129E of TILA. See 75 

FR 66554, 66558 (Oct. 28, 2010) 

(adopting term ‘‘valuation’’). 

To provide guidance on 

§ 1002.14(a)(1), the final rule also adopts 

comments 14(a)(1)–1 through 3 as 

proposed, with an additional 

clarification in comment 14(a)(1)–1 

relating to waiver (see discussion of 

waiver further below), and adopts an 

additional comment 14(a)(1)–7.26

The Bureau considered comments 

seeking clarification that the final rule 

does not require lenders to conduct 

appraisals or other written valuations. 

The Bureau does not believe, however, 

that this clarification is needed in the 

final rule or its commentary. On its face, 

section 701(e) of ECOA requires 

disclosure of copies of the appraisals 

and other written valuations that are 

developed in connection with an 

application. Neither ECOA section 

701(e) nor the final rule requires that 

lenders must obtain appraisals or other 

written valuations. 

The final rule also retains the 

language from the proposed rule— 

‘‘developed in connection with an 

application for credit’’—for determining 

which appraisals and other written 

valuations must be disclosed. Prior to 

the Dodd-Frank Act, ECOA section 

701(e) referred to appraisals that were 

‘‘used’’ in connection with the 

application. Had Congress intended to 

maintain that scope, it could have 

continued to use that term; instead, 

Congress referred to appraisals and 

other valuations that are ‘‘developed’’ in 

connection with the application, 

without necessarily requiring that they 

ultimately be ‘‘used.’’ The Bureau 

assumes this difference in terms reflects 

a deliberate wording choice by 

Congress, and the Bureau does not 

believe consumer protection will be 

enhanced by adjusting the statutory 

terminology. If an appraisal or other 

written valuation is ‘‘developed in 

connection with’’ an application, then 

the applicant may benefit from receiving 

a copy, even if the creditor does not to 

use the valuation. Some commenters 

expressed concern that applicants could 

mistakenly believe that such a valuation 

was ‘‘used’’ by the creditor. However, 

there is nothing in the final rule that 

prohibits creditors from providing 

information to applicants concerning 

whether a particular valuation was 

used.27

As noted above, some commenters 

stated a concern that providing copies of 

appraisals and other written valuations 

to applicants could result in liability 

issues for creditors and preparers of 

appraisals or other written valuations. 

Industry commenters noted questions or 

concerns over whether creditors would 

be deemed to have warranted home 

values contained in their internal 

valuations provided to applicants, and 

on whether consumers would assert 

legal claims based upon their reliance 

on appraisals in deciding whether to 

enter into transactions. The commenters 

do not appear to be raising concerns 

over liability under ECOA section 701(e) 

itself. On its face, section 701(e) 

concerns providing copies of certain 

materials and providing a disclosure. It 

does not specify the content of 

valuations or otherwise supply 

standards regarding what they should 

contain.28 Moreover, ECOA has long 

required creditors to provide copies of 

appraisals upon request, and creditors 

routinely provide copies of appraisals 

for first lien loans including under GSE 

requirements. The commenters have not 

explained how requiring that copies of 

appraisals and other written valuations 

be provided as a matter of course 

increases creditors’ exposure to liability 

under legal standards other than ECOA. 

In any event, as for legal standards other 

than those contained in ECOA, it is 

unclear what authority the Bureau 

would have to limit remedies arising 

from a creditor’s providing copies of 

appraisals or other written valuations.29


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7223 

written appraisal reports, the Bureau believes this 

is a question that arises under USPAP and not 

ECOA; thus it is a matter for appraisers to 

determine pursuant to USPAP, and for the 

Appraisal Standards Board, which is charged with 

developing, interpreting, and amending USPAP. 

30See 12 CFR 1002.2(e)–(f), (j) and (q). 

31 In the context of interpreting the requirement 

of Regulation B that there be a notice of an adverse 

action on an application, for example, the Federal 

Reserve Board Consumer Affairs Letter CA 09–13 

(Dec. 4, 2009), noted that loan modifications can 

involve an ‘‘application’’ for an ‘‘extension of 

credit’’ within the meaning of Regulation B. See 

Consumer Affairs Letter CA 09–13, Mortgage Loan 

Modification and Regulation B’s Adverse Action 

Requirement (2009), available at http:// 

www.federalreserve.gov/boarddocs/caletters/2009/ 

0913/caltr0913.htm. The Board determined that 

certain transactions under the U.S. Department of 

Treasury’s Making Home Affordable Modification 

Program (HAMP) then in place did involve 

applications for extension of credit within the 

meaning of Regulation B. Guidance issued by the 

Board prior to the transfer of ECOA rulemaking 

authority to the Bureau will be applied by the 

Bureau absent further action. 76 FR at 43570 (July 

21, 2011). 

32Similarly, questions about the rule’s coverage 

of temporary loans, such as bridge or construction 

loans, and renewals of credit, relate to the overall 

scope of Regulation B. The final rule is not intended 

to address whether these loans are subject to ECOA 

in the first place. If a temporary loan or a renewal 

is subject to ECOA, and an appraisal or other 

written valuation is developed for that loan, then 

the applicant has a right to receive a copy under 

the final rule. This approach is consistent with 

existing comment 14(a)(1)–2 concerning the 

application of § 1002.14 to renewals, which is 

maintained in the final rule. 

33With respect to the comment suggesting that 

‘‘consummation’’ is not necessarily occurring in the 

loan modification context, the Bureau is not 

persuaded that this is necessarily the case. The term 

‘‘consummation’’ in Regulation Z is defined as the 

time the consumer becomes ‘‘contractually 

obligated on the credit transaction.’’ A loan 

modification can occur contractually, and take 

effect on a date certain. 

34To the extent that an appraisal or other written 

valuation is developed in connection with an 

application received before January 18, 2014, it 

would not be subject to the final rule. 

With regard to the types of 

transactions that are covered by the final 

rule, the Bureau considered industry 

comments seeking clarification on 

whether loss mitigation activities, such 

as loan modifications, short sales, and 

deed-in-lieu transactions, are covered. 

These comments implicate provisions of 

ECOA and Regulation B that turn on 

whether there is an ‘‘applicant’’ or 

‘‘application’’ for an ‘‘extension of 

credit.’’ 30 While some loan 

modifications can be subject to the 

provisions of Regulation B,31 including 

the existing § 1002.14 disclosure-uponrequest regime, there is variation 

between different types of loss 

mitigation programs; the particulars of 

the program at issue are important to 

understand in evaluating whether there 

is an application or applicant for an 

extension of credit within the meaning 

of Regulation B. Accordingly, the 

Bureau believes that questions on 

coverage of these types of transactions 

are best addressed with reference to the 

existing provisions of Regulation B.32

To the extent a loss mitigation 

transaction is covered by Regulation B, 

the transaction is covered by the final 

rule, including its requirement of 

providing copies of appraisals and other 

written valuations. Consumers generally 

will benefit from receiving information 

about the value of their dwelling, both 

in the context of making a decision 

about the loss mitigation transaction 

and also in detecting potential 

discrimination, consistent with the 

purposes of ECOA. The Bureau believes 

these benefits outweigh the cost to the 

creditor of providing copies of 

documentation that the creditor already 

has received. For the reasons discussed 

in the Bureau’s analysis under section 

1022(b) below, the Bureau believes the 

per-loan cost of providing copies of 

these materials is modest, and they will 

often be provided in electronic form. 

The Bureau is therefore not exercising 

its exception authority to exempt loss 

mitigation transactions from § 1002.14 if 

those transactions would otherwise be 

covered by Regulation B.33

While the Bureau has considered the 

comment that the final rule should 

apply to second lien transactions 

because they are higher risk, it is not 

expanding the scope of the final rule to 

include second liens because such an 

expansion would be inconsistent with 

the plain meaning of section 701(e). The 

Bureau notes that the Dodd-Frank Act 

specifically limited the scope of ECOA 

section 701(e) to ‘‘first liens,’’ while 

applying the overlapping requirements 

under section 129H of TILA to certain 

subordinate lien loans that meet the 

definition of ‘‘higher risk mortgage.’’ 

The commenters have not presented 

data or other specific information 

warranting a departure from the plain 

language of ECOA section 701(e). 

The final rule maintains comment 

14(a)(1)–2, pertaining to credit renewals, 

with minor changes for consistency and 

clarity. Comment 14(a)(1)–2 clarifies 

that creditors must provide copies of 

appraisals or other written valuations 

prepared in connection with credit 

renewals requested by the applicant. 

Whether an applicant has requested a 

credit renewal, and when such an 

application is received for purposes of 

the timing requirements under 

§ 1002.14(a)(2), depend on the facts and 

circumstances of an individual 

transaction. The remaining part of 

comment 14(a)(1)–2, clarifying that the 

rule does not apply to the use of an 

appraisal or other written valuation that 

was developed for a prior extension of 

credit, is adopted as proposed. Because 

the creditor in a prior transaction 

covered by the final rule would already 

have been required to provide a copy of 

an appraisal or other written valuation 

to the applicant, requiring the creditor 

in the subsequent transaction to provide 

another copy of that appraisal or other 

written valuation would be 

duplicative.34 The Bureau is therefore 

finalizing comment 14(a)(1)–2 largely as 

proposed. 

In response to industry comments, the 

Bureau has added new comment 

14(a)(1)–7, which clarifies what copies 

must be provided in the event there are 

multiple versions of an appraisal or 

other written valuation. The comment 

clarifies that, if a creditor receives 

multiple versions of a particular 

appraisal or other written valuation, 

then the creditor is required to provide 

a copy of only the latest version 

received by the creditor. (See also the 

discussion of comment 14(a)(1)–4 below 

concerning application of the timing 

requirements in common situations 

where there are multiple versions of a 

particular appraisal or other written 

valuation.) The Bureau believes this 

comment is consistent with the 

language of ECOA section 701(e)(1) 

requiring copies of appraisals and other 

valuations to be provided promptly 

upon ‘‘completion.’’ The ‘‘latest version 

received’’ rule thus clarifies that when 

creditors have multiple versions of a 

particular appraisal or valuation, they 

are only required to provide the latest 

version. The Bureau believes that this 

guidance will help avoid placing 

unwarranted burden on creditors and 

overloading consumers with multiple 

drafts of a particular appraisal or other 

written valuation. 

The Bureau notes, however, that the 

separate requirements of § 1002.14(a)(1) 

for the timing of providing copies to 

applicants will still apply. The 

application of the timing requirements 

to situations in which there are multiple 

versions of a particular valuation is 

further discussed below. 

Comment 14(a)(1)–7 also clarifies that 

if a creditor provides a version of an 

appraisal or other written valuation that 

is later superseded, then the creditor 

still must provide the latest version. 

While the Bureau recognizes that this 

guidance could result in instances in 

which consumers receive multiple 

versions of a particular appraisal or 

other written valuation, it does not 

believe that this result can be avoided 

given the statutory requirements. 


tkelley on DSK3SPTVN1PROD with 
7224 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

35For clarity and to be consistent with other 

similar regulatory requirements under TILA and 

RESPA, the Bureau proposed to use the term 

‘‘consummation’’ in place of the statutory term 

‘‘closing’’ and to clarify that the statutory term ‘‘3 

days’’ means ‘‘three business days.’’ 

36One commenter also expressed concern that the 

term ‘‘consummation’’ is not plain English, and that 

a deadline based upon this term could be difficult 

to understand. This comment is discussed further 

below in the analysis of § 1002.14(b)(1). 

37This commenter also questioned the logic of 

allowing one applicant in a multi-applicant 

transaction to waive the timing for all applicants. 

Comment 14(a)(1)–7 further clarifies 

that a copy of at least one version of 

each appraisal or other written 

valuation must be provided. The Bureau 

believes this comment is needed to 

ensure compliance with the statutory 

requirement that the applicant receive a 

copy of ‘‘any and all’’ appraisals or 

other written valuations ‘‘developed’’ in 

connection with an application. A rule 

requiring only ‘‘final’’ versions to be 

provided would not be consistent with 

the statutory requirement, because it 

would allow creditors to withhold a 

valuation that they determine is a draft 

or preliminary, even if they never 

receive a later version. The statute does 

not distinguish between valuations that 

are preliminary and those that are final 

or valuations that the creditor chooses 

to rely on and those it does not. 

Additionally, the Bureau does not 

believe that such a rule would be 

consistent with the purposes of ECOA’s 

requirement regarding furnishing copies 

of appraisals and other written 

valuations. The chief purpose of this 

provision is to promote transparency 

regarding the loan process to assist 

applicants in determining whether they 

may be the victims of discrimination. 

This purpose would be frustrated if 

creditors could subjectively determine 

which valuations to provide. 

Accordingly, comment 14(a)(1)–7 

clarifies that when there is only one 

version of a particular appraisal or other 

written valuation, a copy must be 

provided to the applicant regardless of 

whether the creditor relied on it or 

viewed it as being preliminary. 

Timing and Waiver 

ECOA section 701(e)(1), requires that 

creditors provide copies of each 

appraisal or other written valuation 

promptly upon completion, but in no 

case later than three days prior to the 

closing of the loan. Accordingly, 

proposed § 1002.14(a)(1) stated that a 

creditor must provide a copy of each 

appraisal or other written valuation 

subject to § 1002.14(a)(1) promptly 

(generally within 30 days of receipt by 

the creditor), but not later than three 

business days prior to consummation of 

the transaction, whichever is first to 

occur.35 The reference to providing the 

copy generally within a 30-day time 

frame was proposed to maintain 

consistency with the existing 

requirements of § 1002.14(a)(2)(ii). 

ECOA section 701(e)(2) provides that 

an applicant may waive the three-day 

requirement provided in ECOA section 

701(e)(1), except where otherwise 

required by law. Accordingly, proposed 

§ 1002.14(a)(1) would have provided 

that, notwithstanding the other 

requirements in § 1002.14(a)(1), an 

applicant may waive the timing 

requirement in the proposal to receive a 

copy of an appraisal or other written 

valuation three business days prior to 

consummation and agree to receive the 

copy at or before consummation, except 

as otherwise prohibited by law. As 

discussed in the proposal, the Bureau 

did not propose that such waivers 

extend to the requirement that copies of 

appraisals and other written valuations 

be provided in the case of an 

application that is withdrawn, 

incomplete, or denied. The Bureau also 

proposed a new comment 14(a)(1)–4 

that would clarify that waivers under 

§ 1002.14(a)(1) are permitted if the 

applicant makes an affirmative oral or 

written statement (which can be made 

by any one applicant in the case of a 

multiple-applicant transaction) and if 

the creditor provides the copies of all 

appraisals and other written valuations 

at or before consummation. 

Public comment. Some commenters 

addressed certain aspects of the timing 

requirement, including the waiver 

provision.36 A few commenters 

suggested shortening the proposed 

general 30-day time limit, to ensure that 

consumers receive copies of the 

appraisals and other written valuations 

at an earlier point in the transaction 

when they are most useful (and can, for 

example, inform price negotiations). An 

organization advocating for affordable 

housing suggested a deadline of three 

days after the creditor’s approval, while 

a real estate agent trade association 

suggested 10 days after receipt, and an 

appraisal group suggested 20 days after 

receipt. 

A large lending institution opposed a 

per se time limit, such as 30 days, 

however. This commenter suggested 

that removing the reference to 30 days 

would ensure lenders can provide an 

integrated package that includes all 

appraisal and other valuation 

documents. Otherwise, an appraisal 

received earlier in the application 

process potentially would need to be 

disclosed before a valuation received 

later. Other industry commenters 

embraced the requirement to provide 

copies of the appraisals and other 

written valuations three business days 

before consummation, without 

expressing support for the 30-day limit 

in the timing requirement. One industry 

commenter suggested, however, that the 

30-day limit should apply in the case of 

an incomplete application. Another 

industry commenter suggested the time 

period for providing copies should not 

begin until the application is 

‘‘complete’’ within the meaning of 

Regulation B, § 1002.2(f). 

One large lending institution 

requested that the Bureau exercise its 

exception authority to allow creditors to 

provide copies of non-substantive 

changes to appraisals and other written 

valuations, such as typographical errors, 

at consummation. This commenter 

believed that without this exception, the 

applicant could receive multiple 

versions of the same document, with 

only non-substantive differences. The 

commenter expressed concern that this 

result would distract consumers and 

interfere with their ability to analyze the 

information received. 

Finally, one commenter suggested 

counting the day of consummation for 

purposes of the three-business-day 

requirement, and the day of receipt for 

purposes of the proposed general 30-day 

limit. 

Commenters generally supported the 

proposed provision granting the 

borrower the right to waive the threebusiness-days-before closing 

requirement for providing copies of the 

appraisal or other written valuation so 

that the copies can be provided at or 

before closing; no comments opposed 

the proposal to allow for a waiver. 

Several commenters noted that a waiver 

right would be important to prevent 

delayed closings. A few comments 

requested that the final rule provide 

additional guidance on what constitutes 

a valid waiver. One creditor trade 

association suggested this guidance be 

provided in the form of a safe harbor, 

including explicit authorization for 

creditors to seek waivers. Two other 

creditor trade associations also sought 

confirmation that creditors could inform 

consumers of their ability to provide 

waivers. An appraisal industry 

commenter suggested, however, that 

before a creditor could seek a waiver, 

the creditor should provide a full 

explanation of the value of receiving the 

copies in a prompt manner, such as the 

value the copy may have in negotiations 

where the valuation estimate is below 

the originally agreed-upon price.37 A 

creditor also requested guidance on 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7225 

38While the commenter did not identify which 

existing standards may have caused such closing 

delays, the Bureau notes that this type of problem 

may arise under GSE Appraisal Independence 

Requirements discussed below. 

39Similarly, the Dodd-Frank Act amendment of 

section 701(e)(1) also requires that the creditor 

provide applicants with copies of appraisals and 

other valuations promptly upon their completion, 

even if the application is incomplete, withdrawn, 

or denied. Therefore, the Bureau is not adopting the 

suggestion of one commenter to tie the timing of 

providing copies to the timing of the ‘‘completed’’ 

application under Regulation B. 

40As noted above, a large creditor suggested if 

there are multiple valuations, some of which are 

prepared or finalized later in the origination 

process, a period longer than 30 days from receipt 

of the first valuation could be needed to provide an 

integrated package of valuation copies to 

consumers. While the Bureau appreciates that an 

integrated package that includes all of the 

appraisals or other written valuations developed in 

connection with the application may be helpful to 

applicants, the Bureau believes that this approach 

could result in some of the valuations in the 

integrated package not being provided promptly. 

Further, the Bureau does not believe that the benefit 

of this suggested approach would outweigh the 

value to the applicant of receiving the copies earlier 

in the transaction. 

41The time period creditors will need to review 

appraisals also may change in the future, as rules 

may be adopted by Federal banking agencies under 

section 1473 of the Dodd-Frank Act, amending 

section 1110 of FIRREA to provide for review of 

appraisals for compliance with USPAP. 

42Fannie Mae Selling Guide, ‘‘Appraiser 

Independence Requirements,’’ (Oct. 15, 2010), 

available at https://www.fanniemae.com/content/ 

fact_sheet/air.pdf (Part III requires that ‘‘the 

Borrower is provided a copy of any appraisal report 

concerning the Borrower’s subject property 

promptly upon completion at no additional cost to 

the Borrower, and in any event no less than three 

days prior to the closing of the Mortgage.’’); Freddie 

Mac, Single Family Seller/Servicer Guide, Exhibit 

35, Appraiser Independence Requirements (Oct. 15, 

2010) (same). These requirements were 

incorporated directly from Part II of the Home 

Valuation Code of Conduct (Dec. 23, 2008), adopted 

by Federal Housing Finance Agency, available at 

http://www.fhfa.gov/webfiles/2302/ 

HVCCFinalCODE122308.pdf. 

whether the waiver can be provided 

within three days prior to 

consummation. This commenter cited 

instances where a delay in receipt of a 

final appraisal due to minor corrections 

resulted in a delayed closing because a 

waiver had not already been executed 

three or more days before closing.38 A 

credit union commenter went further, 

arguing that consumers should be 

allowed to waive the timing 

requirement, regardless of whether the 

corrections are minor. 

Discussion. For the reasons explained 

below, proposed § 1002.14(a)(1) and its 

accompanying commentary are being 

revised to clarify the timing and waiver 

provisions of the rule. The timing 

requirement in § 1002.14(a)(1) is revised 

to provide greater clarity. In addition, 

the final rule includes new comments 

14(a)(1)–4 and 5 to clarify the timing 

requirement. The final rule adopts 

proposed comment 14(a)(1)–4 regarding 

waiver with clarifications and 

renumbers it as comment 14(a)(1)–6. 

As proposed, § 1002.14(a)(1) would 

have required providing copies 

‘‘promptly (generally within 30 days of 

receipt by the creditor), but not later 

than three business days prior to 

consummation of the transaction, 

whichever is first to occur.’’ Several 

commenters sought clarification and 

explanation of this proposed timing 

requirement, which had merged 

language from ECOA section 701(e) as 

amended and existing § 1002.14. For the 

reasons discussed below, the Bureau is 

revising this language to provide a 

simpler rule: The copy must be 

provided promptly upon completion of 

the appraisal or other written valuation, 

or three business days before 

consummation (for closed-end credit) or 

account opening (for open-end credit), 

whichever is earlier. The Bureau is 

including the reference to ‘‘account 

opening’’ to accommodate the 

application of § 1002.14(a)(1) to openend credit transactions and for 

consistency with Regulation Z. 

Regulation Z does not use the term 

‘‘consummation’’ for open-end credit 

secured by a dwelling. See, e.g., 

§ 1026.40 (referring to ‘‘opening’’ of 

home equity plans). 

New comments 14(a)(1)–4 and 5 

clarify that the ‘‘promptly upon 

completion’’ standard is applied based 

upon the facts and circumstances and 

provide illustrative examples of 

situations in which the timing 

requirement would or would not be met. 

Comment 14(a)(1)–4.v clarifies that in 

the absence of a waiver (see discussion 

below), the ‘‘promptly upon 

completion’’ requirement governs even 

if no consummation or account opening 

occurs. 

Based upon industry comments 

noting that appraisals and other 

valuations may undergo review and 

revision, the Bureau believes that basing 

the ‘‘promptly’’ standard upon the date 

of receipt could interfere with creditors’ 

review processes or lead to copies being 

provided to consumers before the 

review processes are complete. In 

addition, using the date of receipt as a 

point of reference could create 

confusion and uncertainty, as the DoddFrank Act amendment of section 701(e) 

refers to ‘‘promptly upon completion.’’ 

Therefore the final rule does not 

mandate using the date of receipt as the 

reference point for the timing 

requirement.39

The Bureau also is not finalizing the 

use of a fixed time period from the 

creditor’s receipt of the appraisal as the 

general standard for determining 

whether copies are promptly provided 

to applicants. Upon further 

consideration, and in light of the public 

comments received, the Bureau believes 

that a time period of 30 days of receipt 

may not result in promptly providing 

copies to applicants in many instances. 

Congress’ use of the term ‘‘promptly 

upon completion’’ evidences an intent 

that applicants should be provided with 

copies of valuations without delay. As 

some commenters noted, the earlier 

these copies are received in the loan 

process, the more helpful they are to 

consumers in analyzing the transaction. 

Applying a fixed 30-day timing 

requirement could result in applicants 

not receiving copies of valuations until 

late in the loan process, even when 

these valuations have been completed 

weeks earlier. Thus the final rule does 

not generally apply a fixed time of 30 

days.40

However, as a large bank commenter 

noted, mandating a fixed time frame 

could reduce the chance that an 

integrated set of materials could be 

provided in a transaction involving 

several types of valuations. Similarly, 

mandating a fixed time frame of any 

kind could increase the chances that the 

creditor would need to make multiple 

deliveries of copies of appraisals or 

other valuations. For example, if a 

creditor receives a valuation from an 

AVM earlier in the application process, 

and the fixed time period were to elapse 

before the appraisal is complete, then 

the creditor would be required to send 

the copy of the AVM out before the copy 

of the appraisal.41 This would increase 

burden on creditors, due to an increase 

in the number of transactions in which 

creditors would need to make multiple 

deliveries of copies to applicants. 

In addition, the Bureau notes that a 

fixed time period is not specified in 

industry guidelines such as 

requirements used by the GSEs which 

purchase or guarantee a significant 

number of first lien mortgage 

transactions annually. The timing 

requirement for providing copies of 

appraisals in these recently-adopted 

GSE guidelines is based upon the Home 

Valuation Code of Conduct (HVCC). The 

HVCC—a standard that had been 

previously adopted by FHFA in 2008 

shortly before Congress began to draft 

the Dodd-Frank Act—contained a 

timing standard that is similar to that 

ultimately included in ECOA section 

701(e) as amended.42

For the reasons stated above, the 

commentary to the final rule clarifies 

that the meaning of the term ‘‘promptly 

upon completion’’ depends upon the 


tkelley on DSK3SPTVN1PROD with 
7226 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

43See Fannie Mae, Appraiser Independence 

Requirements Frequently Asked Questions (Nov. 

2010), available at https://www.fanniemae.com/ 

content/faq/appraiser-independence-requirementsfaqs.pdf (question 46 stating that ‘‘[t]he word 

‘completion’ is meant to reflect when the lender has 

reviewed and accepted the appraisal to include any 

changes or corrections required.’’); see also Freddie 

Mac, Appraiser Independence Requirements 

Frequently Asked Questions, available at http:// 

www.freddiemac.com/singlefamily/ 

appraiser_independence_faq.html#52 (question 52 

stating that ‘‘[t]he terms ‘promptly upon 

completion’ and ‘completed appraisal’ refer to 

when the lender has reviewed and accepted the 

appraisal to include any changes or corrections 

required.’’). 

44ECOA section 701(e)(4) states, in pertinent part, 

‘‘[T]he creditor shall provide a copy of each written 

appraisal or valuation at no additional cost to the 

applicant.’’ 

45See 77 FR 51116 at 51313–14, 51427 (Aug. 23, 

2012) (proposed § 1026.19(f)(1)(iii) and 

commentary). 

46Where there are multiple applicants, the final 

rule adopts the proposed approach of allowing one 

applicant to waive the timing requirement. This 

approach is consistent with the 2013 Interagency 

Appraisals Final Rule being adopted under section 

129H of TILA. Comment 14(a)–1 is revised to clarify 

that the waiver must be provided by the primary 

applicant where one is readily apparent. This 

change is designed to ensure that in multiple 

applicant transactions, the individual providing the 

waiver generally is the same individual who would 

be receiving the documents. 

47See Fannie Mae, Appraiser Independence 

Requirements Frequently Asked Questions (Nov. 

2010) (question 45 stating that Fannie Mae ‘‘does 

not specify what form the waiver must take or 

whether it be oral or written. In addition, [the 

Appraiser Independence Requirements standard] 

does not prohibit that a waiver, given in a timely 

manner, be recorded at some later point when the 

parties are available. ... For example, a lender may 

obtain a waiver from a borrower through an email, 

phone call, or some other means, prior to the threeday period, and then have that waiver recorded in 

writing at the settlement table or at some other 

facts and circumstances, including 

when the creditor receives the appraisal 

or other written valuation, and when 

any review or revisions occur. New 

comment 14(a)(1)–4 also clarifies when 

‘‘completion’’ occurs for these purposes. 

Completion occurs when the lender has 

‘‘reviewed and accepted the appraisal or 

other written valuation to include any 

changes or corrections required,’’ or 

when the creditor receives the last 

version, whichever is later.43

This guidance is then illustrated by 

several examples in new comment 

14(a)(1)–5 of situations in which the 

‘‘promptly upon completion’’ standard 

would or would not be satisfied. While 

the ‘‘promptly upon completion’’ 

standard does not provide the same 

degree of certainty as a fixed time 

period, the Bureau believes that the 

statute specifically contemplates a 

standard that is flexible. 

The Bureau’s final rule implements 

the statutory requirement that copies of 

valuations be provided promptly upon 

completion, but not later than three 

days before consummation. As noted in 

the 2012 ECOA Appraisals Proposal, the 

Bureau is interpreting ‘‘days’’ as used in 

the statute to mean ‘‘business days.’’ 

The Bureau did not receive comments 

on this interpretation, and is adopting 

this standard as proposed. 

To ensure applicants actually receive 

the mandated copies at least three 

business days prior to consummation or 

account opening (absent waiver), the 

final rule includes additional guidance 

in comment 14(a)(1)–4. Under this 

comment, ‘‘provide’’—which is a 

statutory term in ECOA section 

701(e)(4) 44 that is similar to the term 

‘‘furnish’’ in ECOA section 701(e)(1)—is 

interpreted to mean delivery to the 

applicant. The comment clarifies that 

delivery occurs three business days after 

mailing or delivering the copy to the 

last-known address of the applicant, or 

when evidence indicates the applicant 

actually received the copies, whichever 

is earlier. The Bureau believes this 

clarification is consistent with the plain 

meaning of the applicable terms 

‘‘furnish’’ and ‘‘provide’’ in Dodd-Frank 

Act section 1474. In addition, this 

approach is generally consistent with 

the proposed approach to the threebusiness-day timing requirement in the 

2012 TILA–RESPA Proposal.45 This 

clarification also should prevent 

situations in which the creditor mails 

copies of appraisals or other written 

valuations to the applicant three 

business days before consummation or 

account opening, and the applicant does 

not receive these materials until after 

the consummation or account opening. 

This clarification thus should ensure 

that applicants have at least the 

minimum amount of time contemplated 

by section 701(e) to review these copies 

before the transaction is consummated 

or the account is opened. 

While one commenter requested 

including the day of consummation in 

the three-business-day time period that 

is part of § 1002.14(a)(1), the final rule 

does not adopt this approach. Under 

this approach, if a closing were to occur 

at 9 a.m. on a Friday, copies of the 

appraisals and other written valuations 

could be disclosed at 11:59 p.m. on the 

preceding Wednesday via email. This 

would leave the consumer with 

effectively only one day to review the 

materials, which would be inconsistent 

with the three-day requirement in the 

statute. 

The waiver provision in 

§ 1002.14(a)(1) is revised to clarify that 

a waiver applies to both components of 

the general timing requirement, and not 

only to one aspect of it. As proposed, 

the waiver would have applied to only 

one component of the proposed timing 

requirement, the requirement that 

copies be provided three business days 

before closing. Read literally, the 

proposed waiver provision would not 

have applied to the other component of 

the timing requirement, the requirement 

that copies be provided ‘‘promptly.’’ As 

a result, as proposed, applicants would 

only have been permitted to partially 

waive the timing requirement. 

Upon further consideration, the 

Bureau interprets section 701(e)(2) to 

permit consumers to provide a waiver of 

both components of the timing 

requirements. Otherwise, the effect of a 

waiver would be unclear, providing a 

disincentive for applicants and creditors 

to avail themselves of this provision, 

even where a waiver would be in the 

applicant’s interest. Additionally, to the 

extent that the Bureau’s final rule 

departs from the language of the statute 

in this regard, the Bureau relies on its 

authority under section 703(a) to make 

provisions and adjustments to effectuate 

the purposes of and facilitate or 

substantiate compliance with ECOA. 

The Bureau finds that this adjustment is 

warranted to ensure creditors’ ability to 

obtain and applicants’ ability to provide 

a valid waiver of the timing 

requirements of § 1002.14(a)(1). 

The Bureau is finalizing the provision 

in proposed § 1002.14(a)(1) that waiver 

is permitted ‘‘except where otherwise 

prohibited by law.’’ No commenters 

specifically addressed this provision in 

the proposed rule, which is based upon 

the statutory language in ECOA section 

701(e)(2). The Bureau continues to 

believe this limitation is important to 

clarify that other provisions of law may 

not permit waiver. For example, the 

2013 Interagency Appraisals Final Rule 

under TILA section 129H does not 

provide for a waiver of the timing 

requirement for providing copies of 

written appraisals no later than three 

business days before consummation. 

With respect to the form of the 

waiver, the Bureau is finalizing in 

renumbered comment 14(a)(1)–6 the 

provision in proposed comment 

14(a)(1)–4 allowing for an affirmative 

oral or written statement.46 A more 

prescriptive, rigid, or specific set of 

requirements as to the form of the 

waiver could unduly restrict the 

applicant’s ability to exercise the waiver 

right. By allowing for an affirmative oral 

or written waiver, the final rule is 

designed to allow creditors to apply 

existing practices such as the standards 

for waiver of the appraisal copy 

requirement under the Appraisal 

Independence Requirements applied by 

certain GSEs.47 If the waiver resulted in 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7227 

time.’’); see also Freddie Mac, Appraiser 

Independence Requirements Frequently Asked 

Questions, Questions 45–46. 

48See Freddie Mac, Appraiser Independence 

Requirements Frequently Asked Questions 

(question 43 stating that ‘‘[i]f the borrower waives 

the requirement the waiver must be obtained three 

days prior to the closing of the mortgage.’’); see also 

Fannie Mae, Appraiser Independence Requirements 

Frequently Asked Questions (Nov. 2010) (question 

45 stating that ‘‘[s]ituations in which a borrower is 

unaware of his or her right to a copy of the 

appraisal prior to the three days and is then 

provided a waiver of that right at the closing table 

would not be compliant with the intent of [the 

Appraiser Independence Requirements]’’). 

49This approach also is supported by other 

mortgage regulations that allow for technical 

revisions of materials otherwise due to the 

consumer prior to consummation. See, e.g., RESPA 

Regulation X, § 1024.8(c), providing an exception 

for the timing of a disclosure of a HUD–1 settlement 

statement which makes a technical correction; see 

also the Bureau’s 2012 TILA–RESPA Proposal, 

proposed § 1026.19(f)(2)(iv), which would provide 

an exception for the timing of a disclosure due to 

clerical errors, and proposed comment 19(f)(2)(iv)– 

1 (clarifying that ‘‘an error is clerical if it does not 

affect a numerical disclosure’’). 

50Tying this timing requirement to a different 

point in time, such as receipt of an appraisal or 

other written valuation, could result in creditors 

who have received waivers not being able to 

comply when more than 30 days elapse between 

receipt and a decision not to consummate the 

transaction or open the account. 

an applicant not receiving an appraisal 

or other written valuation at all or until 

after consummation or account opening, 

a more prescriptive approach might be 

warranted. Under the final rule, 

however, even if the waiver is obtained, 

creditors are still required to provide the 

required copies at or before 

consummation or account opening. 

With respect to when the waiver must 

be provided, § 1002.14(a)(1) is revised in 

the final rule. ECOA section 701(e) is 

silent on when the waiver must be 

provided. As noted above, several 

industry commenters asked the Bureau 

to provide more guidance on how 

waivers can occur. The Bureau believes 

that further clarity on when applicants 

can provide waivers is important. Under 

§ 1002.14(a)(1) in the final rule, as 

further clarified in comment 14(a)(1)–6, 

waivers can be provided in either of two 

situations: generally before three 

business days of consummation or 

account opening,48 or within three 

business days of consummation or 

account opening if certain conditions 

are met. 

The Bureau believes that, in general, 

requests for waivers should not be 

presented to consumers less than three 

business days before consummation or 

account opening. Permitting such 

requests would, in the Bureau’s view, 

present a risk that consumers would feel 

unduly pressured to provide waivers in 

order to avoid delays in closing and that 

creditors could use such waivers to cure 

previous violations of the rule’s timing 

requirements. The Bureau is adopting in 

§ 1002.14(a)(1) an exception to this 

general rule, however, governing 

treatment of waivers pertaining to 

copies of appraisals or other written 

valuations containing correction of 

clerical errors in previously-provided 

copies. 

Section 1002.14(a)(1) and the 

associated comment 14(a)(1)–6.ii 

therefore clarifies that an applicant can 

provide a waiver within three business 

days of consummation or account 

opening in the following circumstance: 

the creditor receives a revised version of 

an appraisal or other written valuation 

that the applicant already received three 

business days before consummation or 

account opening. The option to provide 

a waiver in this situation would only 

apply, though, if each of the following 

criteria are met: (1) The revisions are 

solely to correct clerical errors in that 

appraisal or other written valuation; (2) 

the revisions have no impact on the 

estimated value; (3) the revisions have 

no impact on the calculation or 

methodology used to derive the 

estimate; and (4) the applicant receives 

the copy of the revised appraisal or 

other written valuation at or prior to 

consummation or account opening. The 

Bureau believes this approach strikes an 

appropriate balance by allowing 

consumers to exercise their waiver right 

to avoid delays in closing due to lastminute, purely clerical corrections in 

appraisals and other written 

valuations.49

Finally, the Bureau is adding language 

to § 1002.14(a)(1) to clarify the timing 

requirement in situations where the 

applicant has provided a waiver, but no 

consummation or account opening 

occurs. In that instance, the copy must 

be provided no later than 30 days after 

the creditor determines the transaction 

will not be consummated or the account 

will not be opened. In the absence of a 

statutory timeframe applicable to this 

situation, the Bureau is exercising its 

authority under ECOA section 703(a) to 

adopt a reasonable period for providing 

copies. The Bureau believes that 

providing a clear rule will reduce 

compliance burden and risks for 

creditors, while ensuring that 

consumers receive copies in a timely 

fashion. Additionally, the timeframe 

adopted uses familiar timeframes from 

longstanding timing requirements for 

providing copies of appraisals under 

existing § 1002.14(a)(2)(ii).50

Delivery of Copies of Appraisals and 

Other Written Valuations 

Section 1474 of the Dodd-Frank Act 

amended ECOA section 701(e) to 

mandate that creditors provide copies of 

appraisals and other written valuations 

regardless of whether the consumer 

affirmatively requests such copies. 

Accordingly, the Bureau proposed to 

remove current § 1002.14(a)(1) and (2), 

which permitted creditors to choose 

between the ‘‘routine delivery’’ and 

‘‘delivery upon request’’ methods of 

complying with the requirements of 

§ 1002.14. Further, proposed comment 

14(a)(1)–1 clarified that if there is more 

than one applicant, the disclosure about 

appraisals and the provision of copies of 

appraisals need only be given to one 

applicant, but they must be given to the 

primary applicant where one is readily 

apparent. 

Public comments. An appraisal group 

commenter suggested that the rule 

should require providing copies to all 

applicants in a multi-applicant 

transaction, if consent has been given to 

provide the copies by electronic means. 

Another industry commenter requested 

clarification of whether delivery can be 

made to the same address for multiple 

applicants. Finally an industry 

commenter asked whether delivery can 

be made to the last-known address. 

Discussion. With respect to whether 

copies of appraisals and other written 

valuations can be sent to the last known 

address, new comment 14(a)(1)–4 

provides that copies of appraisals and 

other written valuations are deemed 

‘‘provided’’ three days after they are 

mailed to the last known address of the 

applicant. See also comment 9–3 

(adopting the ‘‘last-known address’’ 

standard for adverse action notices). The 

Bureau does not believe the other 

requested clarifications regarding this 

provision are necessary. The 

commentary makes clear that the 

creditor is required to deliver the 

materials only to one applicant in a 

multiple-applicant transaction. 

The final rule also does not adopt the 

suggestion by an appraisal industry 

group commenter of requiring copies of 

appraisals and other written valuations 

to be sent to all applicants in a multipleapplicant transaction, if the copies are 

being sent by electronic means. Having 

different rules for different means of 

communication of the copies would 

introduce additional complexity, 

especially if not all of the applicants 

have consented to electronic 

disclosures. This could have the 

unintended effect of discouraging 

creditors from adopting electronic 

delivery methods. Even if all applicants 

have consented to delivery by electronic 

means, the approach suggested by the 

commenter does not override the 

general principle that providing copies 

to one applicant (such as the primary 


tkelley on DSK3SPTVN1PROD with 
7228 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

51 Kleimann Comm. Gp., Inc., Know Before You 

Owe: Evolution of the Integrated TILA–RESPA 

Disclosures 254–256 (July 9, 2012), available at 

http://files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 

52 Id. The discussion in the section-by-section 

analysis of this final rule is limited to the testing 

of the disclosure to be provided in connection with 

a consumer’s application, which is the portion of 

the testing relevant to the appraisal-related 

disclosure required by § 1002.14(a)(2). As discussed 

in the supplementary information to the 2012 

RESPA–TILA Proposal, the Bureau and Kleimann 

also tested prototype designs for the integrated 

disclosure forms to be provided in connection with 

the closing of the mortgage loan and real estate 

transaction. See the Bureau’s 2012 TILA–RESPA 

Proposal, available at http://consumerfinance.gov/ 

regulations/. 

53An industry commenter also was concerned 

that applicants might think they could order their 

own appraisals directly from the creditor, because 

the creditor was providing the disclosure. 

applicant) in a multiple-applicant 

transaction is sufficient. Indeed, the 

suggestion of this one industry 

commenter was not reflected by other 

commenters, whether in industry or on 

behalf of consumers. The Bureau 

therefore believes that a uniform 

requirement, allowing copies to be 

provided to one applicant regardless of 

how they are provided, will best 

facilitate compliance. 

14(a)(2) Disclosure 

ECOA section 701(e)(5) requires that, 

at the time of application, the creditor 

‘‘notify an applicant in writing of the 

right to receive a copy of each written 

appraisal and valuation’’ under section 

701(e). Accordingly, the Bureau 

proposed in section 1002.14(a)(2) that, 

not later than the third business day 

after the creditor receives an application 

subject to § 1002.14(a)(1), a creditor 

shall provide an applicant with a 

written disclosure of the applicant’s 

right to receive a copy of all appraisals 

and other written valuations developed 

in connection with such application. 

Content 

Title XIV of the Dodd-Frank Act 

added two new appraisal-related 

disclosure requirements for consumers. 

New section 701(e)(5) of ECOA, which 

is implemented in this final rule, 

provides as follows: ‘‘At the time of 

application, the creditor shall notify an 

applicant in writing of the right to 

receive a copy of each written appraisal 

and valuation under this subsection.’’ 

15 U.S.C. 1691(e)(5). Similarly, section 

129H(d) of TILA, as added by the DoddFrank Act, provides as follows: ‘‘At the 

time of the initial mortgage application, 

the applicant shall be provided with a 

statement by the creditor that any 

appraisal prepared for the mortgage is 

for the sole use of the creditor, and that 

the applicant may choose to have a 

separate appraisal conducted at the 

expense of the applicant.’’ 15 U.S.C. 

1639h(d). In the absence of regulatory 

action to harmonize the two provisions, 

creditors would be required to provide 

two appraisal-related disclosures to 

consumers for certain loans (i.e., a TILA 

and an ECOA disclosure for higher-risk 

mortgage loans secured by a first lien on 

a consumer’s principal dwelling) and 

just one for certain others (i.e., an ECOA 

disclosure for first-lien, dwellingsecured loans that are not higher-risk 

mortgage loans, or a TILA disclosure for 

higher-risk mortgage loans secured by a 

subordinate lien). 

Given that the ECOA and TILA 

disclosures were both created by the 

same legislation (the Dodd-Frank Act) to 

address overlapping subject matter 

(provision of copies of appraisals) in 

many of the same transactions (first 

liens secured by dwellings), the Bureau 

believes that Congress did not intend 

the disclosure requirements to be 

implemented in a disjointed manner 

that might cause consumer confusion 

and compliance burden for creditors. As 

explained in the proposal, the Bureau 

believes the combined disclosure will 

allow for additional text necessary to 

promote consumer comprehension, 

while also reducing compliance burden 

for industry by allowing for a single 

disclosure to satisfy both statutory 

requirements. Accordingly, the Bureau 

believes this approach serves the 

interests of consumers, the public, and 

creditors. On this basis, the Bureau 

proposed to exercise its authority under 

section 703(a) of ECOA and section 

1405(b) of the Dodd-Frank Act to 

conform the two disclosure 

requirements. In connection with the 

proposed § 1002.14(a)(2) requirement of 

notifying applicants of their ‘‘right to 

receive a copy of all written appraisals 

and valuations developed in connection 

with [their] application,’’ the Bureau 

proposed revising the sample disclosure 

form C–9 for appraisals in Regulation B 

to include language to satisfy the new 

appraisal-related disclosure 

requirements of both ECOA and TILA. 

As part of its larger Know Before You 

Owe public outreach project, which is 

described in more detail in Part III 

above, the Bureau tested several 

versions of the new appraisal-related 

disclosures, all of which combined the 

disclosures required by both ECOA 

section 701(e) and TILA section 129H. 

This testing included consumers and 

industry participants.51 The Bureau 

believed that it was important to test 

both disclosures together in order to 

determine how best to provide 

disclosures required by ECOA section 

701(e) and TILA section 129H in a 

manner that would minimize consumer 

confusion and improve consumer 

comprehension. Testing showed that 

consumers tended to find the combined 

TILA and ECOA disclosures confusing 

when they used specific language set 

forth in the statute. Consumer 

comprehension improved when the 

Bureau developed a slightly longer plain 

language disclosure that was designed 

to incorporate the elements of both 

statutes.52 Based upon the results of that 

testing, the Bureau developed and tested 

the following sample disclosure 

language it proposed to include in Form 

C–9: ‘‘We may order an appraisal to 

determine the property’s value and 

charge you for this appraisal. We will 

promptly give you a copy of any 

appraisal, even if your loan does not 

close. You can pay for an additional 

appraisal for your own use at your own 

cost.’’ 

Public comment. Industry 

commenters generally supported 

development of sample disclosure 

language that meets the disclosure 

requirements of both ECOA section 

701(e) and TILA section 129H. 

Commenters said this approach would 

increase consumer understanding and 

reduce creditor burden and cost, 

eliminating the need for multiple, 

partially duplicative disclosures. 

Several commenters requested that the 

sample disclosure include additional 

clarifying language. 

First, some industry commenters 

suggested the sample disclosure include 

an explanation of creditor use of 

applicant-ordered appraisals. These 

comments suggested that applicants 

should either be told that creditors are 

prohibited from using such appraisals, 

or that borrowers should be notified that 

creditors are under no obligation to use 

the appraisals. One commenter also 

suggested that confusion on this issue 

could be avoided by simply removing 

language concerning the right of 

applicants to order their own appraisals. 

Comments by two national associations 

of creditors suggested the final rule 

provide guidance confirming that 

creditors could vary the text of the 

disclosure to exclude the sentence about 

applicant-ordered appraisals, as ECOA 

did not require this sentence.53

Second, several industry commenters 

urged the Bureau to include the word 

‘‘valuation’’ in the sample consumer 

disclosure describing the materials the 

consumer may receive. Commenters 

generally believed this additional 

language would help consumers to 

understand that some of the information 

they receive may not be appraisals, and 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7229 

54See 12 CFR 1026.42(c)(3) (describing permitted 

actions that do not conflict with appraisal 

independence standards in § 1026.42(a)–(b)). While 

one commenter suggested the sample disclosure 

could lead borrowers to believe, incorrectly, that 

they may order appraisals from the creditor, 

consumer testing did not suggest this confusion is 

likely. The Bureau therefore declines to alter the 

sample disclosure to instruct applicants on how 

they can order appraisals. 

55The word ‘‘valuation’’ also is removed from the 

title of the sample disclosure, for consistency with 

the disclosure requirement and the disclosure text. 56 In addition, because the sample disclosure is 

not a mandatory disclosure, creditors may 

voluntarily choose to refer to the term ‘‘valuation’’ 

in the disclosure unless prohibited by other 

regulations (for example, if the sample language is 

required to be included in the Loan Estimate under 

any final TILA–RESPA Integration rule, and that 

rule applies to the transaction). 

in some cases they might not receive an 

appraisal. 

Other industry commenters offered 

other suggestions. These ranged from 

informing consumers that the time 

frame for ‘‘promptly’’ providing the 

copies would begin from when the 

creditor receives the appraisal or other 

valuation, to advising consumers that 

the creditor could charge for additional 

copies of appraisals or other valuations 

beyond the first copy provided. 

Discussion. While the Bureau has 

considered the comments described 

above, the Bureau is adopting the 

sample disclosure language in form C– 

9 as proposed. The 2013 Interagency 

Appraisals Final Rule under TILA 

section 129H allows for an appraisal 

notice that is the same as the language 

in form C–9, thus preserving the option 

of using a single disclosure to satisfy 

both rules. 

The Bureau is not modifying the 

sentence regarding applicant-ordered 

appraisals. The language informing 

applicants they can order their own 

additional appraisals is included in the 

sample disclosure in form C–9 so that 

this disclosure can also be used to 

satisfy the requirements of the 2013 

Interagency Appraisals Final Rule under 

TILA section 129H, as discussed above, 

and more broadly to educate consumers 

(whether or not they are applying for a 

higher risk mortgage subject to TILA 

section 129H) on their right to order an 

additional appraisal for their own use. 

If this information were not included in 

the sample disclosure, then it could not 

be used to satisfy the requirements 

under TILA section 129H and its 

implementing regulation, the 2013 

Interagency Appraisals Final Rule. 

Therefore the final rule maintains this 

portion of the sample disclosure in form 

C–9. To address industry comments 

suggesting borrowers might try to 

compel lenders to use applicant-ordered 

appraisals in an inappropriate manner, 

new comment 14(a)(2)–1 is being 

included in the final rule. This 

comment clarifies that the rule does not 

affect restrictions on creditor use of 

applicant-ordered appraisals by 

creditors. The Bureau does not believe, 

however, that the concise, tested 

language in the sample disclosure 

should be expanded to discuss these 

standards, which are complex and 

subject to varying interpretations. For 

example, industry commenters differed 

in their views on whether or how 

creditors may use these appraisals. 

Elaborating on this language in the 

sample disclosure to inform consumers 

that creditors cannot use or are not 

obligated to use the appraisals 

applicants may order, without a more 

detailed explanation of the standards 

governing the creditor conduct in the 

appraisal process, could discourage 

consumers from ordering their own 

appraisal as a means of disputing the 

appraisal ordered by the creditor, if they 

were to choose to do so.54 Such 

information could detract from 

consumer comprehension of the 

disclosure, and in any event is not 

required by ECOA section 701(e). 

On the issue of whether to include the 

word ‘‘valuations’’ in the text of the 

consumer disclosure, the Bureau is not 

persuaded that this additional language 

would improve consumer 

comprehension and understanding. 

Consumer testing of an earlier version of 

the sample disclosure language, 

conducted in connection with the 

Bureau’s 2012 TILA–RESPA Proposal, 

indicated that consumers preferred a 

disclosure that did not include the word 

‘‘valuation’’, as simpler and easier to 

understand. While ECOA section 701(e) 

calls for a disclosure that includes this 

word, as noted above, the Bureau is 

exercising its exception authority so that 

the disclosure under section 701(e) can 

be harmonized with TILA section 129H, 

which, among other differences, does 

not refer to ‘‘valuations.’’ Based upon 

consumer testing indicating the 

proposed text was easier to understand 

without the word ‘‘valuation,’’ and 

because allowing a single disclosure 

option for creditors that satisfies both 

regulations under ECOA section 701(e) 

and TILA section 129H reduces creditor 

burden and the volume of consumer 

disclosures, the Bureau believes this 

exception would facilitate compliance 

and consumer understanding. If the 

term ‘‘valuations’’ were included in the 

text of the consumer disclosure, the 

disclosure would not be the same as the 

disclosure for subordinate lien 

transactions (which are not subject to 

section 701(e)), detracting from the 

unified approach that industry 

commenters widely supported. 

Regardless, if a non-appraisal valuation 

is developed in connection with a 

creditor’s credit decision, then a copy of 

that valuation must be provided under 

the final rule. The final rule does not 

regulate communications at the time the 

valuation copy is provided. Creditors 

may choose to include explanations of 

the non-appraisal valuation, if one is 

provided. The Bureau believes that 

allowing voluntary description by the 

creditor at the point of providing copies 

is preferable to mandating a more 

complex up-front disclosure that could 

generate consumer confusion. In 

summary, the Bureau believes that the 

unified disclosure benefits both 

consumers and creditors because it 

clearly communicates basic information 

required by both ECOA section 701(e) 

and TILA section 129H in one 

disclosure. 

The Bureau notes, however, that 

proposed § 1002.14(a)(2) would have 

required notifying applicants of their 

right to receive not only an appraisal, 

but also a ‘‘valuation.’’ This may have 

led to some of the commenters’ 

suggestions of including the term 

‘‘valuation’’ in the sample disclosure. 

Accordingly, for the sake of clarity, and 

to confirm that sample disclosure C–9 

(whose text does not refer to the word 

‘‘valuation’’) would satisfy the 

disclosure requirement in 

§ 1002.14(a)(2), the final rule modifies 

the disclosure requirement to delete the 

word ‘‘valuation.’’ 55 This change is 

made based upon the same exercise of 

the exception authority used to develop 

form C–9, discussed above. The Bureau 

believes this change will prevent 

confusion as to what language is 

required to be included in the 

disclosure.56

The final rule also does not adopt 

other changes industry commenters 

suggested for the sample consumer 

disclosure, as consumer testing did not 

suggest these changes are necessary. For 

example, the Bureau does not believe it 

is necessary to modify the sample 

disclosure to inform consumers that 

applicants can be charged for additional 

copies beyond the first copy. The 

sample disclosure already only refers to 

the right to receive ‘‘a copy’’ without 

charge. Consumer testing did not 

indicate that consumers were concerned 

about what could happen if they wanted 

additional copies. The Bureau also does 

not believe that the sample disclosure 

should be revised to state when the time 

period for ‘‘promptly’’ providing the 

copies begins. The sample disclosure 

already states the creditor will promptly 

provide a copy of an appraisal the 


tkelley on DSK3SPTVN1PROD with 
7230 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

57This comment also is revised to refer to the 

‘‘appraisal or other written valuations’’, consistent 

with the scope of the final rule. 

58See, e.g., 12 CFR 1026.19(a)(1)(i) providing in 

relevant part: 

In a mortgage transaction subject to the Real 

Estate Settlement Procedures Act that is secured by 

the consumer’s dwelling * * * the creditor shall 

make good-faith estimates of the disclosures 

required by section 1026.18 and shall deliver or 

place them in the mail not later than the third 

business day after the creditor receives the 

consumer’s written application. 

59 2012 TILA–RESPA Proposal, at proposed 

§§ 1026.19(e)(1)(iii) and 1026.37(m)(1), available at 

http://www.consumerfinance.gov/regulations/. 

Proposed § 1026.19(e)(1)(iii) provides as follows: 

‘‘Timing. The creditor shall deliver the disclosures 

required under paragraph (e)(1)(i) of this section not 

later than the third business day after the creditor 

receives the consumer’s application.’’ 

60 In addition, if TILA disclosures are provided 

earlier than three days after application, such as for 

open-end credit under Regulation Z § 1026.40, the 

creditor also could provide the disclosure required 

under § 1002.14(a)(2) at that time, though the 

creditor would not be required to do so. 

creditor may order in the future. This 

language already implies that the 

creditor will first need to receive and if 

necessary review the original before it 

makes copies. Consumer testing 

indicated a strong preference for 

succinct, focused language in the 

appraisals disclosure, and did not 

suggest consumers wanted additional 

clarification on the precise nature of the 

timing requirement. 

Finally, to clarify the extent to which 

the text in sample disclosure from C–9 

can be modified by creditors, the Bureau 

is revising the commentary. If the 2012 

TILA–RESPA Proposal is adopted as 

proposed, that rule would require 

including in the TILA–RESPA Loan 

Estimate the same language as this final 

rule adopts in the sample disclosure 

form C–9, without variation. On the 

other hand, the 2012 TILA–RESPA 

Proposal and the mandatory forms 

proposed therein would not apply to 

open-end credit or reverse mortgage 

transactions. Therefore the potential to 

modify the language in the sample 

disclosure may depend on the 

applicability of laws and regulations 

other than ECOA and this final rule. 

Comment Appendix C–1–ii therefore is 

revised to clarify that creditors may 

modify the model form C–9 unless 

otherwise provided by law.57 This 

comment, as revised, addresses the 

commenter question of whether the 

sentence in form C–9 referring to 

applicant-ordered appraisals can be 

modified (or deleted); as the comment 

suggests, the sentence could not be 

changed if the sentence is required by 

another applicable regulation, such as 

the consumer disclosure requirement in 

the 2013 Interagency Appraisals Final 

Rule under TILA section 129H 

applicable to higher-risk mortgages. 

This change to the commentary also 

clarifies that this or any other 

modification would not be permitted in 

a transaction that is subject to the TILA– 

RESPA rule that the Bureau finalizes in 

the future, to the extent that final rule 

maintains the mandatory forms from the 

2012 TILA–RESPA Proposal. 

Timing of Disclosure 

ECOA section 701(e)(5) requires 

creditors to notify applicants in writing, 

at the time of application, of the right to 

receive a copy of each appraisal and 

other written valuation. The Bureau 

interprets the phrase ‘‘at the time of 

application’’ to require creditors to 

provide the ECOA appraisal disclosure 

not later than three business days after 

receiving an application. The Bureau’s 

proposed § 1002.14(a)(2) would have 

required creditors to notify applicants in 

writing, not later than the third business 

day after a creditor receives such 

application, of the right to receive a 

copy of all appraisals and other written 

valuations developed in connection 

with such application. 

This approach to the timing of the 

notification is consistent with the 

disclosure requirements of TILA and 

RESPA. Currently, in transactions 

subject to TILA and RESPA, creditors 

are required to provide disclosures 

required under TILA and RESPA not 

later than the third business day after 

receiving a consumer’s written 

application.58 In its 2012 TILA–RESPA 

Proposal to integrate the other TILA and 

RESPA requirements, the Bureau has 

proposed that the ECOA appraisal 

disclosure be provided as part of the 

Loan Estimate disclosure to be delivered 

not later than the third business day 

after application.59

The Bureau stated in the preamble to 

its ECOA proposal that it believes this 

approach is warranted because 

providing the disclosure to applicants at 

the same time as other similar 

disclosures—and (once adopted) as part 

of a broader integrated disclosure 

document—would allow consumers to 

read the notification in context with 

other important information that must 

be delivered not later than the third 

business day after the creditor receives 

the application. Such an approach could 

reduce the number of pieces of paper 

that consumers receive and facilitate 

compliance by creditors. 

Public comments. Many commenters 

expressed support for the threebusiness-day time frame for the 

disclosure to be made, consistent with 

the current and proposed TILA–RESPA 

approach. Several commenters cited the 

ability to integrate the ECOA appraisal 

disclosure into the integrated TILA– 

RESPA Loan Estimate when adopted as 

a reason for supporting the timing 

requirement in the proposed rule. While 

one commenter suggested the disclosure 

could be better timed as part of the 

application process itself, other 

commenters said it would be 

burdensome for lenders to provide the 

disclosure at that time. One commenter 

also suggested the deadline for the 

disclosure be extended to 10 business 

days. 

A large lending institution also 

requested clarification on when the 

disclosure must be given in business 

transactions in which the use of a 

dwelling as collateral is negotiated and 

added as a term of the credit agreement 

well after the initial application has 

been submitted. In this type of situation, 

the comment recommended that the 

final rule either clarify that the 

disclosure requirement applies only if 

the initial loan application contemplates 

the lender taking a first lien on a 

dwelling, or provide the creditor an 

opportunity to cure and provide the 

disclosure at some later point in the 

application process when it becomes 

apparent a dwelling will be used as 

collateral. 

Discussion. Consistent with most of 

comments received on the timing of the 

disclosure, the final rule maintains the 

three-business day timing requirement 

for the reasons stated in the proposal. 

This time period allows lenders to align 

ECOA appraisal disclosures with TILA– 

RESPA early disclosures in transactions 

that are covered by TILA and RESPA. 

Earlier timing requirements would place 

additional burden on creditors, while 

later timing requirements could result in 

an unwarranted departure from the 

statutory time frame. To ensure 

consistency with the requirements of 

TILA and RESPA, including section 

129H of TILA, the final rule also 

includes new conforming language in 

§ 1002.14(a)(2) providing that the 

disclosure shall be mailed or delivered 

not later than the third business day 

after the creditor receives the 

consumer’s application.60

The final rule includes an exception 

to this requirement, however. In the 

case of an application for credit that is 

not to be secured by a first lien on a 

dwelling at the time of application, if 

the creditor later determines the credit 

will be secured by a first lien on a 

dwelling, the creditor shall mail or 

deliver the notice required under 

§ 1002.14(a)(2) in writing not later than 

the third business day after the creditor 

determines that the loan is to be secured 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7231 

61According to estimates for the average cost of 

an appraisal provided by the U.S. Government 

Accountability Office (GAO), consumers on average 

pay $300–450 for full interior appraisal. See U.S. 

Gov’t Accountability Office, GAO–11–653, 

Residential Appraisals: Opportunities to Enhance 

Oversight of an Evolving Industry, at 22 (2011). 

Other forms of valuation, however, tend to cost less 

than appraisals. Broker Price Opinions typically 

cost $65–125; valuations derived from an AVM 

typically cost $5–25. See id., at 17–18; see also U.S. 

Gov’t Accountability Office, GAO–12–147, Real 

Estate Appraisals: Appraisal Subcommittee Needs 

to Improve Monitoring Procedures, at 39 (2012). 

by a first lien on a dwelling. The Bureau 

believes this is a reasonable 

interpretation of the statute in the 

absence of a specific provision in ECOA 

section 701(e) on this point. ECOA 

section 701(e)(5) calls for a notice ‘‘at 

the time of application,’’ but does not 

address the timing of the notice when 

the creditor does not know at that time 

that the credit will be secured by a first 

lien on a dwelling. The Bureau is 

therefore exercising its authority under 

ECOA section 703(a) to provide a 

timeframe for notification in this 

situation to assist creditors in 

complying with rule and to ensure that 

applicants involved in these 

transactions receive the notice. 

The Bureau also notes that it did not 

receive comments on its proposal to set 

the start of the three-day time period as 

the time when the creditor receives the 

‘‘application.’’ The Bureau is finalizing 

the use of this term as proposed. 

Because Regulation B already defines 

the term ‘‘application’’ in § 1002.2(f) 

with reference to the creditor’s 

‘‘procedures’’ for receiving a request for 

credit, the Bureau believes this 

approach will permit creditors to setup 

their procedures to align the timing for 

the appraisal notice with other 

disclosure requirements. 

14(a)(3) Reimbursement 

ECOA section 701(e)(3) affirms that 

creditors may require applicants to pay 

reasonable fees to reimburse the creditor 

for the cost of the appraisal, except 

where otherwise required in law. 

Section 701(e)(4) provides, however, 

that creditors shall provide a ‘‘free’’ 

copy of each appraisal or other written 

valuation at no additional cost to the 

applicant. Accordingly, the Bureau 

proposed § 1002.14(a)(3) to implement 

section 701(e)(3) and (4), as added by 

the Dodd-Frank Act, and provide greater 

clarity. The Bureau stated in the 

preamble to its proposal that it 

interpreted these two provisions to 

permit creditors to charge applicants 

reasonable fees to reimburse the creditor 

for costs of the appraisal or other 

valuation itself, but not for 

photocopying, postage, or similar costs 

associated with providing one written 

copy to the applicant. Thus the Bureau 

proposed removing current comment 

14(a)(2)(ii)–1, which permits creditors to 

charge photocopy and postage costs 

incurred in providing a copy to the 

applicant. 

The Bureau also proposed that 

§ 1002.14(a)(3) affirm that creditors may 

impose fees to reimburse the costs of 

appraisals or other valuations. ECOA 

section 701(e)(3) does not expressly 

refer to valuations, and thus does not 

expressly permit or prohibit creditors 

from charging reasonable fees to 

reimburse the cost of valuations. The 

Bureau stated that because ECOA 

section 701(e)(3) does expressly permit 

such fees for ‘‘appraisals,’’ legislative 

intent with respect to other types of 

‘‘valuations’’ is unclear. The Bureau 

stated that it believed that there is both 

consumer and industry benefit to 

affirming that creditors may charge 

reasonable fees for reimbursement for 

all types of property valuations. Absent 

such clarification, the statutory language 

might be read as implicitly forbidding 

creditors from charging reimbursement 

fees for obtaining certain types of 

valuations, such as broker-price 

opinions or AVM reports, but not for 

others, such as appraisals. The Bureau 

stated that it did not believe that 

Congress intended such a result, which 

could create an incentive for creditors to 

favor full appraisals over less costly 

forms of valuation that may be 

appropriate in particular 

circumstances.61 Such a result would 

impose additional costs on loan 

applicants. Accordingly, the Bureau 

proposed to interpret section 701(e)(3) 

of ECOA as permitting creditors to 

charge applicants a reasonable fee to 

reimburse the creditor for the cost of 

developing an appraisal or other 

valuation, except as otherwise provided 

by law. In proposing this interpretation, 

to the extent necessary, the Bureau 

proposed to rely on the authority 

provided in ECOA section 703(a) to 

provide adjustments and exceptions for 

any class of transactions. 

The Bureau proposed that comment 

14(a)(3)–2 clarify that § 1002.14(a)(3) 

would not prohibit the creditor from 

charging a fee reasonably designed to 

reimburse costs incurred in connection 

with obtaining appraisal and other 

valuations services, but would not 

permit increasing the fee for the 

appraisal or other valuation to cover 

costs of providing documentation under 

§ 1002.14. As stated in the proposal, the 

Bureau believed that ECOA section 

701(e)(3) and (4) did not call for more 

prescriptive rate regulation of valuationrelated activities. By contrast, section 

1472 of the Dodd-Frank Act created 

TILA section 129E, which specifically 

imposes a criterion for appraiser fees— 

that they be ‘‘reasonable and 

customary’’ in the market area where 

the property is located—and specified 

various sources for determining whether 

fees meet the standard. The Bureau 

therefore stated that it did not believe 

that Congress intended ECOA section 

701, which focuses on the provision of 

copies of written valuation documents 

to loan applicants rather than the 

substantive performance of appraisal 

and other valuation services, to function 

in such a manner. Accordingly, the 

Bureau stated that it believed that 

section 701(e)(3) and (4) is simply 

designed to prevent direct or indirect 

‘‘upcharging’’ related to the provision of 

documents that is the focus of this 

section of the statute. 

To clarify the statutory language 

stating that creditors cannot seek 

reimbursement for the cost of the 

appraisal ‘‘where otherwise required in 

law,’’ the Bureau also proposed that 

comment 14(a)(3)–2 note that other laws 

may separately prohibit creditors from 

charging fees to reimburse the costs of 

appraisals, and are not overridden by 

section 701(e)(3). For instance, section 

1471 of the Dodd-Frank Act requires 

creditors to obtain a second interior 

appraisal in connection with certain 

higher-risk mortgages, but prohibits 

creditors from charging applicants for 

the cost of the second appraisal. TILA 

section 129H(b)(2)(B), 15 U.S.C. 

1639h(b)(2)(B). 

The Bureau proposed comment 

14(a)(3)–1 to provide examples of the 

specific types of charges that are 

prohibited under the regulation, such as 

photocopying fees and postage for 

mailing a copy of appraisals or other 

written valuations. In addition, 

comment 14(a)(3)–2 was proposed to 

clarify that § 1002.14(a)(3) does not 

prohibit creditors from imposing fees 

that are reasonably designed to 

reimburse the creditor for costs incurred 

in connection with obtaining actual 

appraisal or other valuation services, so 

long they are not increased to cover the 

costs of providing copies required under 

§ 1002.14(a)(1). 

Public comment. Several commenters 

addressed proposed § 1002.14(a)(3). 

These comments generally addressed 

the following two aspects of 

§ 1002.14(a)(3): the proposed provision 

relating to reasonable fees charged to 

reimburse costs of appraisals and other 

valuations, and the provision 

prohibiting charges for the costs of 

providing copies of appraisals and other 

valuations to applicants. 


tkelley on DSK3SPTVN1PROD with 
7232 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

62An appraisal industry commenter objected to 

certain language in the Bureau’s preamble, 

including the statement that appraisals could 

involve ‘‘needless cost’’ in certain transactions 

where other valuations could be used, and to the 

statement that broker price opinions and automated 

valuation models are ‘‘equally appropriate’’ for 

some transactions. 

63See, e.g., 12 CFR 323.3(a)(1) exempting real 

estate-related financial transactions with a 

transaction value of less than $250,000 from the 

FDIC’s rule requiring FDIC-insured institutions to 

obtain an appraisal performed by a State certified 

or licensed appraiser for all real estate-related 

financial transactions. 

64With respect to proposed § 1002.14(a)(3) more 

broadly, the comment suggesting the word 

‘‘reimbursement’’ be used more consistently left 

unclear exactly how it would suggest the term be 

used. 

65These other laws may include requirements 

applicable to estimates of loan fees provided at the 

time of application, limitations on changes to these 

fees in certain circumstances, prohibitions against 

charging for second appraisals in higher-riskmortgage transactions involving ‘‘flipping,’’ and 

prohibitions against unfair, deceptive, and abusive 

acts and practices under applicable law. While one 

commenter requested additional clarification of 

what charges are prohibited by § 1002.14(a)(3), the 

Bureau believes that the phrase ‘‘otherwise 

provided by law’’ is intended to be open-ended, and 

calls for creditors to consider applicable laws when 

setting their fees. As noted in the proposal, the 

Bureau does not believe that ECOA section 701(e) 

calls for rate regulations. 

No commenters opposed the proposal 

to allow creditors to charge reasonable 

fees for appraisals and other valuations 

unless otherwise provided by law. One 

industry commenter requested that the 

rule explicitly allow the fee to cover 

costs charged by appraisal management 

companies (AMCs), which can be either 

a component of or supplemental to the 

cost of the appraisal. This commenter 

argued that Congress did not intend to 

prohibit AMC fees in the Dodd-Frank 

Act, as it specifically provided for their 

disclosure in the settlement statement 

pursuant to RESPA section 4(c). 12 

U.S.C. 2603(c). Another industry 

commenter suggested that the final rule 

interpret ‘‘reasonable fee’’ to mean a fee 

that was disclosed and agreed to by the 

applicant. A different industry 

commenter requested additional 

clarification on what could not be 

charged under this provision.62

In addition, several industry 

commenters requested that the rule 

allow creditors to withhold copies of the 

appraisals and other valuations if the 

borrower did not pay the permitted fees 

to reimburse the cost of appraisals and 

other valuations. Some commenters 

noted this type of exception would be 

particularly important in transactions 

where the application is withdrawn, 

incomplete, or denied. One commenter 

also requested that disclosure required 

under section 14(a)(2) inform the 

consumer of the ability of the creditor 

to withhold these copies. 

Industry commenters were generally 

supportive of the proposed prohibition 

on charges for providing copies of 

appraisals and other written valuations. 

While a large internet lender 

specifically agreed with the proposed 

prohibition, a few lending institutions 

objected to the proposed prohibition on 

the grounds that it would force them to 

absorb additional costs. Because 

proposed § 1002.14(a)(3) and comment 

14(a)(3)–1 referred to a prohibition on 

charges for providing ‘‘a copy,’’ several 

industry commenters suggested this 

could be read as prohibiting charges for 

providing duplicate or additional 

copies. These commenters therefore 

requested that the final rule clarify that 

creditors could charge for subsequent 

copies of appraisals and other written 

valuations. A large industry trade 

association also noted a concern over 

whether the prohibition against 

charging for copies of appraisals and 

other written valuations would prohibit 

indirect recovery of these costs. 

Discussion. Section 1002.14(a)(3) in 

the final rule and associated 

commentary are generally adopted as 

proposed, with some minor 

clarifications as discussed below. 

As in the proposal, § 1002.14(a)(3) in 

the final rule clarifies that charges for 

valuations are not prohibited by section 

701(e)(3) of ECOA. No commenters 

addressed this provision in the 

proposal. As noted in the proposal, in 

adopting this provision in the final rule, 

the Bureau relies to the extent necessary 

on its authority to make adjustments 

under section 703(a) of ECOA. Such an 

adjustment would facilitate compliance 

with ECOA and prevent circumvention, 

and also would effectuate the purposes 

of ECOA. Otherwise, ECOA section 

701(e)(3) might be interpreted as 

distinguishing between one type of 

valuation (an ‘‘appraisal’’) whose cost 

may be reimbursed by applicants, and 

all other types of valuations whose cost 

may not be reimbursed by the applicant. 

Yet the definition of ‘‘valuation’’ in 

section 701(e)(6) of ECOA refers broadly 

to ‘‘any estimate of the value of a 

dwelling,’’ without distinguishing 

between these types of valuations. 

Under such an interpretation, the 

Bureau would need to provide guidance 

on how to distinguish between appraisal 

and non-appraisal valuations; without 

such guidance, creditors could 

deliberately or inadvertently 

mischaracterize non-appraisal 

valuations as appraisals to recover their 

cost, or creditors may avoid valuations 

altogether to avoid incurring 

unrecoverable costs. Additionally, as 

noted in the proposal, a distinction 

between the ability to recover costs for 

appraisals versus other types of 

valuations could discourage creditors 

from using less costly forms of 

valuations, especially in smaller dollaramount transactions. For example, 

Federal banking regulations do not 

require federally-insured financial 

institutions to obtain an appraisal in 

low-risk real estate-related financial 

transactions in which the transaction 

value is $250,000 or less.63 It is not the 

purpose of ECOA section 701(e) to 

encourage one type of valuation over 

another; its purpose is to inform the 

consumer of the basis for the credit 

decision. Thus the adjustment in 

§ 1002.14(a)(3) will ensure the final rule 

adheres more closely to the purpose of 

ECOA as well. 

At the same time, comment 14(a)(3)– 

2 in the final rule clarifies that in 

allowing reasonable fees to reimburse 64

the cost of appraisals and other 

valuations, § 1002.14(a)(3) is not 

intended to create a legal obligation of 

the applicant to pay these fees. As noted 

above, one commenter suggested a link 

between the concept of a ‘‘reasonable 

fee,’’ and whether the fee was disclosed 

and agreed to by the consumer. While 

the Bureau does not believe that the 

term ‘‘reasonable fee’’ could be equated 

in all cases with fees disclosed to and 

agreed by the applicant, the commenter 

highlights the relevance of the 

applicant’s agreement to pay the fee. 

Whether the legal obligation to pay the 

fee exists is a matter arising under other 

laws, including without limitation 

contract law, however. Other laws also 

may limit the ability to recover these 

fees, as indicated by the phrase ‘‘unless 

otherwise provided by law’’ in 

§ 1002.14(a)(3).65

In response to the comment seeking 

clarification that § 1002.14(a)(3) does 

not limit the recoverability of AMC 

charges, the Bureau recognizes that the 

Dodd-Frank Act did not intend to 

prohibit recovery of AMC fees. As the 

commenter noted, RESPA section 4(c) 

allows but does not require creditors to 

break out the AMC fees on the 

settlement statement from the fees paid 

directly to the appraiser. The 

commenter suggests that recoverability 

of AMC fees was left in doubt by the 

proposed comment 14(a)(3)–2, referring 

to fees ‘‘reasonably designed’’ to 

reimburse creditor costs incurred ‘‘in 

connection with obtaining’’ appraisal 

and other valuation services. To clarify, 

the Bureau is revising comment 

14(a)(3)–2 so its language more closely 

tracks ECOA section 701(e) (which 

refers to ‘‘reasonable fees’’ to reimburse 

appraisal costs, rather than fees that are 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7233 

66As noted in comment 14(a)(3)–2, the 

prohibition against charging for copies is designed 

to prevent an increase of charges within a specific 

transaction based upon the copies that must be 

provided. Thus a creditor would be prohibited from 

imposing a line-item fee for providing copies, or 

from adjusting other line item fees based upon the 

copies that are provided (for example, increasing 

the points and fees in the closing statement above 

the amount specified in the loan estimate to 

account for costs of copies that are being provided). 

67As noted in the proposal, § 1002.4(d)(2) of 

Regulation B currently provides that the disclosures 

Continued 

‘‘reasonably designed’’ for this purpose) 

and to specifically indicate that section 

14(a)(3) is not intended to prohibit 

recovery of AMC fees. 

The final rule also adopts the 

prohibition in proposed § 1002.14(a)(3) 

against charging for providing a copy of 

an appraisal or other written valuation 

‘‘as required under the final rule.’’ 

While industry commenters raised a 

question of whether creditors could 

charge for providing additional copies 

of the same appraisal or other written 

valuation, such as when the applicant 

requests them, the Bureau does not 

believe that the regulation is unclear on 

this point. The final rule, in 

§ 1002.14(a)(1), requires only that the 

creditor provide ‘‘a copy’’ of each 

appraisal or other written valuation. The 

prohibition against charging for copies 

only applies to copies that are ‘‘required 

under the final rule.’’ Because the final 

rule does not require that creditors 

provide more than one copy, there is no 

suggestion in the final rule that creditors 

are prohibited from charging for 

duplicates or additional copies. If they 

do provide additional duplicate copies, 

it would not be pursuant to a 

requirement in the rule. The Bureau also 

does not believe the rule requires, as 

one commenter suggested, the tracking 

of mailing or copying costs and even 

their refund to the consumer to ensure 

they are not included in the interest rate 

previously set.66

To fully implement the prohibition in 

§ 1002.14(a)(3) against charging for 

providing a copy of an appraisal or 

other written valuation, the Bureau also 

is amending the commentary to sample 

disclosure form C–9. Comment 

Appendix C–1–ii is revised to remove 

the suggestion that a creditor may add 

text to the disclosure notifying the 

applicant of the cost the applicant will 

be required to pay for a copy of the 

report. 

The Bureau declines to add an 

exception in the final rule to the 

requirement to provide copies of 

appraisals and other written valuations 

where the applicant has not paid the fee 

for the appraisal or other written 

valuation. Section 1002.14(a)(2)(ii) of 

Regulation B currently calls for 

providing the copy after receipt of the 

request, the report, or reimbursement for 

the report, ‘‘whichever is last to occur.’’ 

As proposed, § 1002.14(a)(2) would no 

longer have based the timing of 

disclosure upon the receipt of payment. 

The Bureau believes this approach is 

consistent with the language of ECOA 

section 701(e) as amended. The 

statutory timing requirement concerning 

providing copies contains no reference 

to receipt of reimbursement for the 

valuation from the applicant. Moreover, 

ECOA section 701(e)(4) specifically 

states that ‘‘notwithstanding’’ the 

creditor’s ability to charge a reasonable 

fee to reimburse the creditor’s appraisal 

costs, the creditor ‘‘shall provide’’ the 

copy at no additional cost. The Bureau 

does not believe that conditioning the 

creditor’s obligation to provide copies at 

no additional cost on the applicant’s 

reimbursement of the costs of the 

appraisal or other written valuation 

would be consistent with legislative 

intent as expressed in ECOA section 

701. 

The Bureau understands the need for 

creditors to manage payment risks. The 

final rule does not affect the ability of 

creditors to request up-front payment 

from applicants before appraisals or 

other written valuations are ordered 

(which would protect creditors even if 

the application is withdrawn, 

incomplete, or denied), to collect 

payment at consummation or account 

opening, or to undertake other efforts to 

collect the fee if the transaction is not 

consummated or the account is not 

opened. The Bureau therefore declines 

to adopt this exception suggested by 

comments it received. 

14(a)(4) Withdrawn, Denied, or 

Incomplete Applications 

ECOA section 701(e)(1) requires 

providing copies of the appraisals or 

other written valuations ‘‘whether the 

creditor grants or denies the applicant’s 

request for credit or the application is 

incomplete or withdrawn.’’ The Bureau 

therefore proposed in § 1002.14(a)(4) 

that the requirements of § 1002.14(a)(1) 

also apply whether credit is extended or 

denied or if the application is 

incomplete or withdrawn. Specifically, 

creditors would be required to provide 

copies of appraisals and other written 

valuations even in situations where an 

applicant provides only an incomplete 

application. 

Public comments. Two national 

associations of creditors suggested that 

the Bureau use its adjustment authority 

under ECOA to eliminate the statutory 

requirement to provide copies of 

appraisals and other written valuations 

where an applicant withdraws from the 

application process before indicating an 

intent to proceed. These commenters 

argued that the valuation is not relevant 

to the withdrawing applicant, and 

providing a copy would impose an 

unnecessary cost. 

Discussion. Dodd-Frank Act section 

1474 amended ECOA section 701(e) to 

require providing copies of appraisals 

and other written valuations even in 

cases where the application is 

withdrawn. The statute did not 

distinguish between withdrawals that 

occur before or after declaring an intent 

to proceed with the transaction. While 

the commenter suggested the Bureau 

should exercise its exception authority 

in cases in which the application is 

withdrawn before the applicant 

expresses an intent to proceed, the 

Bureau is not persuaded there is a basis 

for doing so here. The ‘‘intent to 

proceed’’ standard governs whether fees 

can be charged to applicants under 

Regulation X, which implements 

RESPA, and not when applicants have 

a protected interest against 

discrimination under ECOA. The 

Bureau does not believe that the 

purpose of ECOA in preventing, 

detecting, and remedying 

discrimination would be served by 

providing such an exception. Under 

Regulation X, § 1024.7(a)(4), the intent 

to proceed comes after the applicant has 

received a good faith estimate (or a 

revised good faith estimate), which 

quotes loan terms to applicants and 

which could be based upon an appraisal 

or other written valuation. Indeed, in 

some cases the very reason that the 

consumer elects to withdraw the 

application may be the result of what 

the lender has said or done in response 

to the appraisal or other valuation, for 

example by changing the interest rate 

based on a lower-than-expected loan to 

value ratio. Therefore the text of 

§ 1002.14(a)(4) is adopted as proposed. 

14(a)(5) Copies in Electronic Form 

The Bureau believes that it is 

appropriate to allow creditors to provide 

applicants with copies of appraisals and 

other written valuations in electronic 

form if the applicant consents to 

receiving the copies in such form. 

Accordingly, the Bureau proposed that 

§ 1002.14(a)(5) permit copies of 

appraisals and other written valuations 

required by § 1002.14(a)(1) to be 

provided to the applicant in electronic 

form, subject to compliance with the 

consumer consent and other applicable 

provisions of the Electronic Signatures 

in Global and National Commerce Act 

(E-Sign Act) (15 U.S.C. 7001 et seq.).67


tkelley on DSK3SPTVN1PROD with 
7234 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

required to be provided in writing by Regulation B 

may be provided to the applicant in electronic form, 

subject to compliance with the consumer consent 

and other applicable provisions of the E-Sign Act. 

While § 1002.4(d)(2) refers to written ‘‘disclosures’’, 

the E-Sign Act also applies more broadly to 

‘‘information relating to a transaction’’ that is 

required to be made available in writing. 15 U.S.C. 

7001(c)(1). Thus the proposal sought to clarify that 

the requirements of the E-Sign Act also would 

apply to providing copies of appraisals and other 

written valuations. 

68The Bureau notes that the Board adopted this 

exception to the requirements of the E-Sign Act for 

certain disclosures required in Regulation B in 

amendments to provide guidance on electronic 

delivery of disclosures. For the same reasons that 

the Board cited, the Bureau believes that permitting 

the disclosure required in § 1002.14(a)(2) to be 

provided without regard to the consumer consent 

or other provisions of the E-Sign Act when the 

disclosure accompanies an application the 

consumer accesses electronically eliminates a ‘‘a 

potential significant burden on electronic 

commerce without increasing the risk of harm to 

consumers.’’ 72 FR 63445, 63448 (Nov. 9, 2007). 

69This option would not necessarily be available 

for all transactions. For example, if the 2012 TILA– 

RESPA Proposal is finalized as proposed, the 

appraisal notice will be required to be included in 

the integrated TILA–RESPA Loan Estimate. The 

exception under § 1002.4(d)(2) would not be 

triggered by a Loan Estimate disclosed after the 

application, rather than accompanying the 

application. 

70See 12 CFR 701.31(c)(5), which currently 

provides: 

Each Federal credit union shall make available, 

to any requesting member/applicant, a copy of the 

appraisal used in connection with that member’s 

real estate-related loan application. The appraisal 

shall be available for a period of 25 months after 

the applicant has received notice from the Federal 

credit union of the action taken by the Federal 

credit union on the real estate-related loan 

application. 

71S. Rept. 167, 102nd Cong., at 90 (1991). The 

Senate Report stated as follows: ‘‘Regulations by the 

National Credit Union Administration (NCUA) 

currently require credit unions to make appraisals 

available without regard to who has paid for the 

appraisal;[] test[sic] this legislation is not intended 

to modify those NCUA regulations. Neither is the 

legislation intended to affect the current custom of 

many lenders routinely to provide copies of 

appraisal reports.’’ 

Public comments. Several industry 

commenters supported the option of 

consent-based electronic delivery. Two 

lenders suggested the E-Sign Act 

consent process is burdensome, and 

should not be required; one industry 

commenter suggested that the E-Sign 

Act consent process is important, 

however. 

Discussion. The Bureau believes that 

application of the E-Sign Act to the 

electronic disclosure of copies of 

appraisals and other written valuations 

is appropriate, and the final rule 

maintains this condition. While one 

commenter noted that the appraisal is 

not a contract document, Section 101(a) 

of the E-Sign Act governing electronic 

signatures in contracts is not the 

provision at issue here. Rather, Section 

101(c) of the E-Sign Act, 15 U.S.C. 

7001(c), governs consent for provision 

of consumer disclosures by electronic 

means. The commenter therefore has 

not articulated a basis for treating copies 

of appraisals and other written 

valuations as falling outside the scope of 

Section 101(c). In any event, however, 

applying the E-Sign Act requirements to 

provision of copies of appraisals and 

other written valuations by electronic 

means would not force creditors to 

institute E-Sign Act compliance 

procedures. Creditors could simply 

choose not to provide the copies by 

electronic means. 

The Bureau also notes that because 

the disclosure required by 

§ 1002.14(a)(2) is a written disclosure 

required by Regulation B, § 1002.4(d)(2) 

will permit that disclosure to be 

provided electronically based upon a 

consent given in compliance with the ESign Act. There is no need to restate this 

point in a separate provision within 

§ 1002.14. As discussed at the beginning 

of the section-by-section analysis above, 

the Bureau is revising the electronic 

disclosure provision in § 1002.4(d)(2), 

however, to ensure its exception can 

apply to the new notice required by 

§ 1002.14(a)(2) of the final rule, which 

replaces the consumer notice required 

by existing § 1002.14(a)(2)(i). While this 

change was not proposed in the 

proposal, this revision is necessary to 

maintain the consistency of crossreferences in Regulation B and its 

existing approach to electronic 

disclosure of the consumer notice 

required under § 1002.14. In particular, 

existing § 1002.4(d)(2) allows the 

creditor to provide written disclosures 

required by certain specified provisions 

of existing Regulation B, including 

existing § 1002.14(a)(2)(i), electronically 

without regard to consumer consent or 

provisions of the E-Sign Act, if the 

disclosure ‘‘accompan[ies] an 

application accessed by the applicant in 

electronic form.’’ The Bureau believes 

this cross-reference in § 1002.4(d)(2) to 

the notice requirement in § 1002.14(a)(2) 

should be maintained, for the same 

reasons the Board did not apply the ESign Act requirements to disclosures 

provided with the application.68 In 

addition, creditors could choose to 

provide the notice as an accompanying 

disclosure with the application, which 

would, by definition, be provided 

within three business days of the 

application as required by this final 

rule.69 Therefore, the cross-reference is 

being updated to reflect the citation to 

the disclosure provision in the final 

rule, § 1002.14(a)(2). 

Removal of Exemption for Credit 

Unions 

The Board’s 1993 Final Rule on 

Providing Appraisal Reports (1993 Final 

Rule) provided in § 1002.14(b) that 

credit unions were exempt from the 

requirements in § 1002.14(a) to provide 

copies of appraisals upon request, if not 

provided routinely. See 58 FR 65657, 

65660 (Dec. 16, 1993). In the 1993 Final 

Rule, the Board pointed to pre-existing 

NCUA regulations, and how they 

already required credit unions to 

provide copies of appraisals upon 

request.70 The Board also cited the 

legislative history of the 1991 ECOA 

amendments, which indicated Congress 

was aware of these pre-existing 

regulations and thus did not intend to 

modify them.71 Accordingly, the Board 

found it unnecessary to require under 

Regulation B what the NCUA already 

required under its own regulations. 

Under today’s version of the NCUA 

regulation, 12 CFR 701.31(c)(5), Federal 

credit unions are still required to make 

available to any requesting member/ 

applicant a copy of the appraisal used 

in connection with that member’s real 

estate-related loan application. 

However, as described above, the DoddFrank Act amendments to ECOA 

removed the prior provisions of section 

701(e) and replaced them with 

requirements that were significantly 

broader in scope. Unlike the prior 

provisions of section 701(e), section 

701(e) as amended requires creditors to 

provide copies of all valuations, and not 

only appraisals; section 701(e) also 

requires that creditors provide these 

copies automatically, rather than 

allowing them to be provided upon 

request. Thus amended section 701(e) 

guarantees that applicants will receive 

copies of valuations that are performed, 

including non-appraisal valuations, and 

regardless of whether applicants 

specifically request the copies. In 

addition, neither section 1474 of the 

Dodd-Frank Act nor its legislative 

history refers to an exception for credit 

unions subject to, and complying with, 

the provisions of the NCUA regulations 

relating to making appraisals available 

upon request. Accordingly, the Bureau 

proposed deleting the exemption for 

credit unions provided in § 1002.14(b). 

Public comment. Most credit union 

commenters urged the Bureau to 

maintain the exemption for credit 

unions, suggesting, for example, that the 

existing rule (requiring disclosure on 

request) be maintained and that credit 

unions did not need to be covered by 

the new rule because they were not a 

cause of the financial crisis that the 

Dodd-Frank Act was intended to 

address. One of the commenters argued 

that the Bureau should maintain the 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7235 

72The Bureau also does not believe that the final 

rule implementing section 701(e) affects the ability 

of credit unions to comply with the existing NCUA 

regulations at 12 CFR 701.31(c)(5). Credit unions 

that comply with the final rule requiring disclosure 

of appraisals and other valuations to applicants also 

would be able to comply with existing NCUA 

regulations by maintaining appraisals on file for the 

specified time period for provision upon request. 

73 Despite commenter suggestions that the Bureau 

could wait to see if NCUA adopted its own rule, the 

Dodd-Frank Act does not suggest it is the 

responsibility of NCUA to issue such a rule under 

ECOA, backed by the remedies which ECOA 

provides. Section 1085 of the Dodd-Frank Act 

amended ECOA to transfer ECOA rulemaking 

authority (including authority under ECOA section 

701(e)) to the Bureau. Section 1061 of the DoddFrank Act also transferred consumer financial 

protection functions of the NCUA to the Bureau. In 

any event, if the NCUA were to amend its rules in 

a manner consistent with section 701(e), the Bureau 

would review that regulation and consider any 

consequences that regulation could have on the 

application of this final rule to credit unions. 

74Section 3(2)(C) of the Plain Writing Act of 2010 

excludes regulations from the scope of its 

requirements. In any event, the term 

‘‘consummation’’ need not be included in the 

disclosure applicants will receive under 

§ 1002.14(a)(2) and is not included in the sample 

disclosure. 

75The Bureau also does not agree with the 

comment suggesting that consummation could 

occur at the end of the rescission period. TILA 

specifically defines its rescission right as arising 

‘‘following the consummation of the transaction,’’ 

15 U.S.C. 1635(a), such that the existence of a 

rescission period after consummation under TILA 

would not affect the pre-consummation timing 

standards in this final rule. 

exemption in order to allow the NCUA 

to amend its regulations to conform to 

section 701(e) of ECOA. Some of these 

commenters suggested the proposed 

rule would be burdensome, particularly 

when viewed in combination with the 

other rules being implemented under 

the Dodd-Frank Act. One credit union 

stated, however, that it understood the 

Bureau’s proposed rationale for 

removing the exemption in Regulation 

B. An appraisal industry commenter 

also stated that it supported removing 

the exemption. 

Discussion. As noted in the proposal, 

Congress did not exclude credit unions 

from the requirements of ECOA section 

701(e), and the legislative history of the 

Dodd-Frank Act did not suggest 

Congress intended to exclude credit 

unions, unlike when Congress adopted 

the previous version of section 701(e) in 

1991. Moreover, even assuming credit 

unions may have had a lesser role in 

precipitating the financial crisis to 

which the Dodd-Frank Act responded, 

the purposes of ECOA include 

preventing and remedying unlawful 

discrimination in credit transactions. By 

including the requirement to provide 

copies of appraisals and other written 

valuations in ECOA, Congress made the 

judgment that enhanced transparency of 

appraisals and other written valuations 

would further these purposes. In 

addition, applicants to credit unions 

have an equal interest in the protection 

and remedies afforded by ECOA as 

applicants to other creditors. Failure to 

apply the rule to credit unions would 

result in applicants to these creditors 

not having the same guarantees of 

receiving copies of appraisals and other 

written valuations promptly (regardless 

of whether they request them), or of 

receiving copies of non-appraisal 

valuations at all. In addition, the Bureau 

is not persuaded by the comments that 

the final rule implementing section 

701(e) would impose a significant 

additional burden on creditors, as credit 

union commenters did not establish that 

credit unions do not follow the general 

industry practice of providing copies of 

appraisals to applicants in first lien 

transactions.72 The Bureau therefore is 

not persuaded that the standards for 

exercising its exception authority are 

met, whether under section 703(a) of 

ECOA to effectuate the purposes of, or 

foster compliance with, ECOA or under 

section 1405(b) of the Dodd-Frank Act 

to protect the interests of consumers and 

the public.73 Accordingly, the final rule 

does not include an exemption for 

credit unions. 

14(b) Definitions 

As discussed below, the Bureau 

proposed to define three terms in 

§ 1002.14(b). The Bureau also requested 

comment on whether there are 

additional terms that should be defined 

for purposes of this rule and how best 

to define those terms in a manner 

consistent with ECOA section 701(e). 

14(b)(1) Consummation 

As discussed above, for clarity and to 

be consistent with other similar 

regulatory requirements under TILA and 

RESPA, the Bureau proposed that 

§ 1002.14(a)(1) use the term 

‘‘consummation’’ in place of the 

statutory term ‘‘closing.’’ The Bureau 

proposed to define the term 

‘‘consummation’’ in § 1002.14(b)(1) as 

the time that a consumer becomes 

contractually obligated on a credit 

transaction. This definition mirrors the 

definition of the term provided in 

§ 1026.2(a)(13) of Regulation Z. 

The Bureau also proposed two 

comments to clarify the meaning of the 

term ‘‘consummation.’’ First, comment 

14(b)(1)–1 was proposed to clarify that 

the question of when a contractual 

obligation on the consumer’s part is 

created is a matter to be determined 

under applicable law; proposed 

§ 1002.14 does not make this 

determination. A contractual 

commitment agreement, for example, 

that under applicable law binds the 

consumer to the credit terms would be 

consummation. Consummation, 

however, does not occur merely because 

the consumer has made some financial 

investment in the transaction (for 

example, by paying a nonrefundable fee) 

unless, of course, applicable law holds 

otherwise. Second, comment 14(b)(1)–2 

was proposed to clarify that 

consummation does not occur when the 

consumer becomes contractually 

committed to a sale transaction, unless 

the consumer also becomes legally 

obligated to accept a particular credit 

arrangement. 

Public comments. The Bureau 

received very few comments on this 

definition. One industry commenter 

suggested the term would be confusing 

in the case of a rescindable transaction, 

and also queried whether 

consummation would occur when the 

lender issues a loan commitment. One 

commenter suggested the term is not 

plain English. 

Discussion. The lack of industry 

comments on use of the term 

‘‘consummation’’ suggests that industry 

is familiar with the meaning of the term. 

Consummation is a term that is defined 

elsewhere in regulations and used 

throughout mortgage regulations. The 

Bureau believes it is appropriate to use 

here for consistency and precision for 

closed-end transactions, and that given 

its common usage confusion is 

unlikely.74 In any event, for clarity, this 

final rule adopts the proposed 

comments 14(b)(1)–1 and 2 clarifying 

the meaning of ‘‘consummation;’’ this 

guidance mirrors longstanding guidance 

in Regulation Z.75 Accordingly, the final 

rule thus maintains the definition of the 

term ‘‘consummation’’ as proposed. 

14(b)(2) Dwelling 

The Bureau proposed that 

§ 1002.14(b)(2) retain the definition of 

the term ‘‘dwelling’’ in current 

§ 1002.14(c). Specifically, 

§ 1002.14(b)(2) proposed to define the 

term ‘‘dwelling’’ as a residential 

structure that contains one to four units 

whether or not that structure is attached 

to real property, and including but not 

limited to an individual condominium 

or cooperative unit, and a mobile or 

other manufactured home. 

Public comment. Industry 

commenters asked the Bureau to clarify 

several aspects of the definition of 

‘‘dwelling.’’ For example, several 

commenters asked the Bureau to clarify 

in the final rule whether the definition 

of ‘‘dwelling’’ refers only to an owneroccupied dwelling, or to any residential 


tkelley on DSK3SPTVN1PROD with 
7236 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

76The comment provides that ‘‘[u]nder 

Regulation B, a transaction is credit if there is a 

right to defer payment of a debt—regardless of 

whether the credit is for personal or commercial 

purposes, the number of installments required for 

repayment, or whether the transaction is subject to 

a finance charge.’’ 

77Regulation B generally uses the term ‘‘business 

credit’’ where unique or different requirements are 

applied to business or commercial transactions. The 

final rule does not adopt special or different 

requirements, and therefore uniformly uses the term 

‘‘credit.’’ 

78This definition also is similar to the definition 

of dwelling in Regulation C, which covers ‘‘a 

residential structure (whether or not attached to real 

property) located in a state of the United States of 

America, the District of Columbia, or the 

Commonwealth of Puerto Rico. The term includes 

an individual condominium unit, cooperative unit, 

or mobile or manufactured home.’’ 12 CFR 1003.2. 

The Bureau does not believe the Regulation C 

definition should be adopted for this rule, however. 

The Regulation C definition could broaden the 

scope of the final rule beyond one-to-four family 

dwellings, while it is unclear that ECOA section 

701(e) as amended contemplated this result. 

79With respect to the example raised by a creditor 

and two national creditor associations—three fourunit buildings operated as a 12-unit apartment 

complex, the text of the rule makes clear that a fourunit residential building would be a dwelling, but 

a 12-unit apartment complex is not. Thus a 

transaction secured by a four-unit residential 

building would be covered by the rule, but a 

transaction secured by the entire 12-unit apartment 

complex would not be. Because this question can 

be analyzed in a straightforward manner by 

reference to the text of the rule, the Bureau does not 

believe that further commentary is needed for this 

to be apparent. Similarly, the definition of 

‘‘dwelling’’ refers to the example of an ‘‘individual 

condominium or cooperative unit,’’ but not to a 

cooperative building as a whole, even though such 

a building may contain several individual units. 

80HUD standards for its Title I insurance program 

for manufactured homes, for example, provide 

valuation standards. U.S. Dep’t of Hous. & Urban 

Dev., TI–481, Changes to the Title I Manufactured 

Home Loan Program, at App. 2–1, D (Apr. 2009) 

(requiring valuations that meet HUD standards for 

transactions involving existing manufactured 

homes); id. at App. 8–9, C (describing valuation 

standards for certain manufactured home 

transactions); U.S. Dep’t of Hous. & Urban Dev., TI– 

437, Appraisals of Manufactured Homes and Lots, 

at 1–2 (Jan. 1996) (describing valuation standards 

for manufactured homes classified as personal 

property and manufactured home transactions 

involving real property). GSEs also have standard 

forms available on their Web sites, such as Fannie 

Mae Form 1004C and Freddie Mac Form 70B, for 

conducting appraisals of manufactured home 

transactions eligible for purchase by them. 

81For a definition of ‘‘manufactured home,’’ see 

also 42 U.S.C. 5402(6) and related HUD regulations 

at 24 CFR 3280.2. 

dwelling regardless of the applicant’s 

residence in the building. Several 

commenters in the manufactured 

housing industry also requested that the 

definition of ‘‘dwelling’’ exclude 

residential structures that are not 

attached to the real property, such as 

recreational vehicles and house boats, as 

well as manufactured homes when 

titled as chattel. Further, some industry 

commenter asked for clarification on 

whether the rule applies to commercial 

transactions. Some of these comments 

requested that the final rule exclude 

commercial transactions even when 

they involve a first lien on a dwelling. 

One commenter argued, however, that 

covering commercial transactions would 

promote education, knowledge, and 

creditor safety and soundness by 

ensuring applicants are aware of the 

appraisals and other valuations on 

which the credit decisions are based. In 

addition, some industry commenters 

requested clarification on whether the 

final rule would cover certain multiple 

residence situations involving a single 

lot, such as three four-unit buildings 

situated on a single land parcel and 

operated as one small 12-unit apartment 

complex. Finally, one commenter 

suggested the definition of ‘‘dwelling’’ 

be harmonized with the definition in 

Regulation C promulgated under the 

Home Mortgage Disclosure Act (HMDA), 

which is not limited to one-to-fourfamily structures, while another 

commenter suggested the definition be 

limited to single-family housing. 

Discussion. The final rule does not 

exclude business credit when it is 

secured by a first lien on a dwelling 

because business credit is covered by 

ECOA and Regulation B. ECOA section 

701(e) applies to a ‘‘creditor’’, a term 

that ECOA section 702(e) defines by 

reference to the term ‘‘credit’’ in section 

702(d). Section 702(d) of ECOA does not 

limit the term ‘‘credit’’ to credit for 

personal, family, or household 

purposes, and Regulation B has long 

interpreted ‘‘credit’’ to include personal 

and ‘‘business credit.’’ See comment 

1002.2(j)–1 (discussing definition of 

‘‘credit’’ in § 1002.2(j)); 76 § 1002.2(g) 

(definition of ‘‘business credit’’).77

Thus, the final rule covers applications 

for business credit to be secured by a 

first lien on a dwelling. 

The final rule adopts the definition of 

‘‘dwelling’’ as proposed. When 

describing the transactions subject to 

section 701(e) of ECOA, Dodd-Frank Act 

section 1474 used the term ‘‘dwelling’’, 

which has been defined in § 1002.14(c) 

as follows: ‘‘[T]he term dwelling means 

a residential structure that contains one 

to four units whether or not that 

structure is attached to real property. 

The term includes, but is not limited to, 

an individual condominium unit, and a 

mobile or other manufactured home.’’ 78

Given that this definition was in place 

when Congress amended ECOA section 

701(e) and used the term ‘‘dwelling’’ in 

specifying the scope of the requirement, 

the Bureau believes that it is appropriate 

to continue to use the existing definition 

of ‘‘dwelling.’’ 

The definition of ‘‘dwelling’’ in 

§ 1002.14(c) requires that the unit be a 

‘‘residential structure’’, but does not 

require that it be ‘‘owner-occupied.’’ As 

a result, the requirements of the final 

rule can apply to transactions involving 

one-to-four-unit residential structures 

that may be business or commercial in 

nature, including for investment 

purposes. Beyond this, whether a 

transaction meets the definition will 

depend on the facts and circumstances. 

Because transaction structures can vary 

widely, the Bureau does not believe it 

would be efficient or appropriate to try 

to address all such variations in the text 

of the rule or the commentary.79

The definition of ‘‘dwelling’’ in 

Regulation B, § 1002.14(c), currently 

includes a residential structure 

‘‘whether or not * * * attached to real 

property,’’ and lists as an example a 

‘‘mobile or other manufactured home.’’ 

Industry commenters reported that a 

significant number of consumers in the 

United States reside in manufactured 

homes. The Bureau does not believe the 

comments articulate a valid basis for a 

new exemption under Regulation B for 

manufactured homes that would 

otherwise meet the definition of 

‘‘dwelling.’’ Whether an applicant has a 

right to receive a copy of an appraisal 

or other written valuation that has been 

performed should not turn on whether 

the residential structure is built on site 

or in a factory for later installation on 

site—particularly when such valuations 

can be done for these transactions.80

The definition of ‘‘dwelling’’ in 

Regulation B is appropriately broad 

enough to encompass manufactured 

homes. The Bureau recognizes, 

however, that transactions involving 

manufactured homes will not always 

result in appraisals or other written 

valuations. This issue is taken into 

account in § 1002.14(b)(3) discussed 

below. 

The final rule also provides 

clarification in response to comments by 

several industry trade associations that 

§ 1002.14 should not apply to certain 

other structures, such as recreational 

vehicles or boats. Unlike manufactured 

homes, which are specifically 

enumerated examples of a ‘‘dwelling’’ in 

existing § 1002.14(c) and proposed 

§ 1002.14(b)(2),81 other structures such 

as boats and recreational vehicles are 

not enumerated as examples. Though 

boats and recreational vehicles may 

have residential uses in some cases, the 

fact that they are not expressly 

enumerated here in existing Regulation 

B suggests that, unlike manufactured 

homes, they are not exclusively 

residential by nature and are not always 

covered by the existing appraisal copy 

requirements at § 1002.14. Therefore, 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7237 

82See 12 CFR part 1026, Supp. I, comment 

2(a)(19)–2. This comment states as follows: ‘‘Use as 

a residence. Mobile homes, boats, and trailers are 

dwellings if they are in fact used as residences, just 

as are condominium and cooperative units. 

Recreational vehicles, campers, and the like not 

used as residences are not dwellings.’’ 

83Under 12 U.S.C. 5519(f)(1), the term ‘‘motor 

vehicle’’ means—(A) Any self-propelled vehicle 

designed for transporting persons or property on a 

street, highway, or other road; (B) recreational boats 

and marine equipment; (C) motorcycles; (D) motor 

homes, recreational vehicle trailers, and slide-in 

campers, as those terms are defined in sections 

571.3 and 575.103(d) of title 49, Code of Federal 

Regulations, or any successor thereto; and (E) other 

vehicles that are titled and sold through dealers.’’ 

84H. Conf. Rept. 517, 111th Cong., at 877 (2010) 

(joint explanatory statement on Dodd-Frank Act); 

see also H. Rept. 94, 111th Cong., at 99 (2009) 

(discussing proposed revision to ECOA in H.R. 1728 

that was later introduced in the Dodd-Frank Act, 

H.R. 4173). 

while the Bureau does not see a basis for 

removing ‘‘manufactured homes’’ from 

the list of enumerated examples of a 

dwelling in § 1002.14 (see existing 

§§ 1002.14(c) and 1002.13(a)(2)), there is 

a basis for analyzing boats and 

recreational vehicles differently. 

In addition, even though Regulation Z 

commentary has long stated that boats 

and trailers can be dwellings and has 

not ruled out that recreational vehicles 

and campers also could be dwellings,82

they are not covered by the 2013 

Interagency Appraisals Final Rule under 

TILA section 129H. See Regulation Z, 

§ 1026.35(c)(2)(iii). As noted above, the 

rules implementing ECOA section 

701(e) and TILA section 129H allow for 

identical consumer disclosure 

concerning appraisals and require 

creditors to provide copies of appraisals 

to applicants. To the extent regulations 

implementing ECOA section 701(e) and 

TILA section 129H can be aligned, 

burden on creditors is reduced. 

Accordingly, the Bureau is adopting 

comment 14(b)(2)–1 to confirm that the 

requirements of § 1002.14 in particular 

do not apply to transactions secured 

solely by motor vehicles as defined by 

12 U.S.C. 5519(f)(1)—a term that 

includes boats, motor homes, 

recreational vehicles, and other 

vehicles, but not manufactured 

homes.83 It is not clear that in amending 

section 701(e) of ECOA in the DoddFrank Act, Congress intended to provide 

a basis for requiring creditors to provide 

copies of valuations when selling motor 

vehicles used as residences. The 

legislative history for section 701(e) 

specifically refers to providing 

protections for ‘‘mortgage applicants,’’ 

for example.84 ECOA section 701(e)(6) 

also lists examples of ‘‘valuations’’ that 

are used in the real estate context— 

broker price opinions, GSE values, and 

AVMs (a term which section 1473 of the 

Dodd-Frank Act defined within the 

context of Title XI of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act (FIRREA), a statute 

focused on ‘‘real estate related 

transactions’’, 12 U.S.C. 3331). To the 

extent any motor vehicle transactions 

otherwise could be subject to § 1002.14, 

the Bureau exercises its exception 

authority under ECOA section 703(a) to 

exclude them. As noted above, because 

the legislative history does not clearly 

suggest an intent to cover motor vehicle 

transactions, the exclusion will facilitate 

compliance by reducing regulatory 

uncertainty, and will be consistent with 

the purposes of section 701(e) of ECOA 

as reflected in the legislative history 

described above. 

The Bureau did not, however, seek 

comment in the proposal on whether 

structures that are ‘‘motor vehicles’’ can 

be covered by or should be excluded 

from the scope of ECOA and Regulation 

B more broadly, including the 

information collection requirements of 

§ 1002.13. This clarification in comment 

14(b)(2)–1 is therefore limited to 

§ 1002.14 and is not a pronouncement 

on whether boats, trailers, recreational 

vehicles, campers, or motor vehicles 

would otherwise fall within the 

definition of ‘‘dwelling’’ in other 

provisions of Regulation B. 

14(b)(3) Valuation 

ECOA section 701(e) refers to 

‘‘valuations,’’ which it defines as ‘‘any 

estimate of the value of a dwelling 

developed in connection with a 

creditor’s decision to provide credit, 

including those values developed 

pursuant to a policy of a government 

sponsored enterprise or by an 

automated valuation model, a broker 

price opinion, or other methodology or 

mechanism.’’ Accordingly, proposed 

§ 1002.14(b)(3) would have defined the 

statutory term ‘‘valuation’’ as ‘‘any 

estimate of the value of a dwelling 

developed in connection with a 

creditor’s decision to provide credit.’’ 

Comment 14(b)(3)–1 was proposed, 

based on current comment 14(c)–1, to 

provide the following list of examples of 

valuations, which included the three 

examples listed in the existing comment 

(which were examples of an ‘‘appraisal 

report’’), and added the three additional 

specific examples of ‘‘valuations’’ 

provided in ECOA section 701(e)(6): 

• A report prepared by an appraiser 

(whether or not certified and licensed), 

including written comments and other 

documents submitted to the creditor in 

support of the appraiser’s estimate or 

opinion of the property’s value. 

• A document prepared by the 

creditor’s staff that assigns value to the 

property, if a third-party appraisal 

report has not been used. 

• An internal review document 

reflecting that the creditor’s valuation is 

different from a valuation in a third 

party’s appraisal report (or different 

from valuations that are publicly 

available or valuations such as 

manufacturers’ invoices for mobile 

homes). 

• A value developed pursuant to a 

methodology or mechanism required by 

a government sponsored enterprise, 

including written comments and other 

documents submitted to the creditor in 

support of the estimate of the property’s 

value. 

• A value developed by an automated 

valuation model, including written 

comments and other documents 

submitted to the creditor in support of 

the estimate of the property’s value. 

• A broker price opinion prepared by 

a real estate broker, agent, or sales 

person, including written comments 

and other documents submitted to the 

creditor in support of the estimate of the 

property’s value. 

The proposal noted that the Bureau 

understands that many documents 

prepared in the course of a mortgage 

transaction may contain information 

regarding the value of a dwelling, but 

are not themselves an appraisal or other 

written valuation. The Bureau explained 

it does not believe that consumers 

would benefit from receiving 

duplicative pieces of information 

concerning appraisals and other written 

valuations. Additionally, the proposal 

noted that it is important that the rule 

make it simple for creditors to 

distinguish between documents that 

must be provided to applicants and 

those that are not required to be 

provided. Accordingly, the Bureau 

proposed comment 14(b)(3)–2, based on 

current comment 14(c)–2, to clarify that 

not all documents that discuss or restate 

a valuation of an applicant’s property 

constitute ‘‘appraisals or other written 

valuations’’ for purposes § 1002.14(a)(1). 

For further clarification, the Bureau 

proposed that the comment provide the 

following list of examples of documents 

that discuss the valuation of the 

applicant’s property but nonetheless are 

not appraisals or other written 

valuations for purposes of the 

requirement to provide a copy to 

applicants: 

• Internal documents, that merely 

restate the estimated value of the 

dwelling contained in an appraisal or 

other written valuation being provided 

to the applicant. 

• Governmental agency statements of 

appraised value that are publically 

available. 


tkelley on DSK3SPTVN1PROD with 
7238 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

85An appraisal industry group also noted that the 

sixth proposed valuation example—broker price 

opinion—should clarify that they would not 

necessarily be permitted to be used in the credit 

transaction. 

86 In addition, a GSE commenter indicated that 

one of its tools does not communicate a ‘‘value’’ to 

the creditor. 

87Comments 14(b)(3)–1 and 2 in the final rule 

provide a list of examples of documents that are 

valuations subject to the copy requirement, and 

comment 14(b)(3)–3 provides a list of documents 

that are not valuations subject to the copy 

requirement. As these comments note, these lists 

are not exclusive. The Bureau may issue guidance 

• Valuations lists that are publically 

available (such as published sales prices 

or mortgage amounts, tax assessments, 

and retail price ranges) and valuations 

such as manufacturers’ invoices for 

mobile homes. 

Public Comments. As noted above, a 

few industry commenters argued that 

the definition of valuation generally 

should be limited to estimates that were 

relied upon or used by the creditor in 

making its credit decision. 

An appraisal industry group 

suggested that the first proposed 

example of a valuation in proposed 

comment 14(b)(3)–1—a report prepared 

by an appraiser (whether or not licensed 

or certified)—should be modified to 

avoid suggesting that an unlicensed and 

uncertified appraiser is qualified.85

GSEs and other industry commenters 

commented on the fourth proposed 

valuation example, values developed 

pursuant to a GSE-required method or 

mechanism.86 The GSE commenters 

noted that they allow but do not require 

that lenders use the GSE AVMs. A GSE 

commenter also noted that its AVM 

report could be provided to the 

borrower to satisfy the proposed rule. 

While some commenters expressed 

concern that GSE valuations were 

proprietary and creditors were 

forbidden from disclosing them, a large 

lending institution noted that the GSEs 

have reviewed and approved standard 

letters for the disclosure of GSEdeveloped valuations to consumers. 

Several lending and appraisal 

industry groups commented on the fifth 

proposed valuation example— 

valuations developed by AVMs. 

Commenters noted that AVM reports 

can be highly technical, including 

special coding and information that 

would be confusing to consumers. Some 

of these commenters suggested that 

AVMs therefore be excluded from the 

definition of ‘‘valuation.’’ Other 

commenters requested additional 

clarification of how the term AVM is 

defined, such as whether it would 

include property inspection waivers 

(PIW), property inspection alternatives 

(PIA), Desktop Underwriter (DU)®, and 

Loan Prospector (LP)® reports. A few 

commenters suggested that the property 

inspection reports (PIPs) that may 

accompany some AVMs should be 

excluded from the definition of 

‘‘valuation.’’ On the other hand, an 

appraisal industry commenter suggested 

including PIPs accompanying AVMs. 

More broadly, a significant number of 

industry commenters strongly objected 

to the inclusion, in the first, fourth, 

fifth, and sixth proposed valuation 

examples, of ‘‘written comments and 

other documents submitted to the 

creditor in support of’’ the estimate. 

These commenters generally believed 

this language exceeded the statutory 

definition of the term ‘‘valuation’’ in 

section 701(e)(6) of ECOA, and argued 

that the language was vague and would 

expose them to substantial uncertainty 

as to what they would need to provide 

to applicants in a given transaction. 

Some commenters believed this 

wording could trigger time consuming 

and costly internal discovery by 

creditors and valuation preparers to 

search within and outside the credit 

institution for all written 

correspondence and other documents 

pertaining to the valuation, including 

reviews by AMCs, internal reviews, and 

evaluations of appraisal reports, some of 

which may be privileged or proprietary, 

and other materials. Some commenters 

also noted this language could result in 

burdensome disclosures to consumers 

who would be confused by voluminous 

information including background 

materials. 

Industry commenters requested 

clarifications of and additions to the list 

of examples of documents that are not 

valuations. Manufactured housing 

industry commenters strongly 

supported the third proposed example 

excluding manufacturers’ invoices for 

mobile homes, but suggested that the 

term ‘‘mobile home’’ is outdated and the 

term ‘‘manufactured home’’ should be 

used instead, consistent with industry 

usage and regulations of the Department 

of Housing and Urban Development 

(HUD). These comments also requested 

that the documents reflecting the 

‘‘maximum loan amount’’ for 

manufactured homes be excluded, 

because they may reveal manufacturer 

pricing information. 

Other commenters suggested that the 

list of examples of documents that are 

not valuations include the following: 

quality checks, fraud checks, internal 

reviews of valuations such as appraisal 

reviews, technical background data used 

by AVMs, and other ancillary 

documents developed for use by the 

appraiser or underwriter. Some 

commenters were concerned that some 

documents meeting the definition of 

valuation would be proprietary or 

reflect proprietary information. One 

industry commenter also was unsure 

whether a document integrating 

multiple publicly-available valuations 

would itself be a valuation. Finally, as 

discussed above, several industry 

commenters requested clarification that 

preliminary, draft, or other non-final 

documents be excluded. 

Discussion. The Bureau is finalizing 

the definition of valuation in 

§ 1002.14(b)(3) as proposed, with one 

technical change. In the proposal, the 

phrases ‘‘developed in connection with 

an application for credit’’ in the 

description of the requirement in 

§ 1002.14(a)(1) regarding the materials 

that must be provided, and the phrase 

‘‘developed in connection with a 

creditor’s decision to provide credit’’ in 

the definition of valuation in 

§ 1002.14(b)(3), were taken directly from 

the text of ECOA sections 701(e)(1) and 

(6) respectively. The Bureau does not 

believe that Congress intended these 

phrases to have different meanings. As 

a practical matter, many appraisals or 

other written valuations developed in 

connection with an application for 

credit will be a valuation developed in 

connection with a creditor’s decision to 

provide credit and vice versa. However, 

using different terms in the rule could 

suggest there may be circumstances in 

which a valuation falls into one 

category, but not another. To facilitate 

compliance by eliminating uncertainty 

and to ensure the final rule gives full 

effect to section 701(e)(1), which is 

controlling as to the materials that must 

be provided to applicants, the Bureau 

interprets section 701(e)(6) consistently 

with 701(e)(1), and to the extent 

necessary is exercising its authority 

under ECOA section 703(a), to use the 

phrase ‘‘developed in connection with 

an application for credit’’ in the 

definition of ‘‘valuation’’ in 

§ 1002.14(b)(3). 

The final rule also makes a number of 

clarifying revisions to the commentary. 

As noted earlier, comment 14(a)(1)–7 is 

being added to the final rule to clarify 

that drafts or other non-final materials 

need not be provided if they have been 

superseded by later versions. In 

addition, as discussed below, the final 

rule incorporates several revisions to 

proposed comment 14(b)(3)–1 and 

proposed comment 14(b)(3)–2 (which is 

renumbered as comment 14(b)(3)–3), 

and adds a new comment 14(b)(3)–2. 

These revisions address certain 

additional concerns of commenters 

regarding the materials that must be 

provided to applicants.87


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7239 

from time to time to identify other examples for 

either list. 

88This revision also is intended to focus this 

example on GSE valuation methods, and to 

distinguish this example from appraisals and other 

written valuations prepared by other third parties. 

89Similarly, one commenter expressed concern 

that the proposed rule could require disclosure of 

documents in the possession of third parties other 

than the creditor. Yet the final rule does not apply 

to persons who are not creditors within the 

meaning of Regulation B, § 1002.2(l), and thus does 

not impose any obligation on a creditor to compel 

a third party to provide a copy of such 

documentation to the applicant. 

The list of examples of valuations in 

comment 14(b)(3)–1 has been revised to 

eliminate the phrase ‘‘written comments 

and other documents submitted to the 

creditor in support of’’ the estimate. The 

Bureau believes that the list of materials 

that must be provided will be easier for 

creditors to understand if it refers 

simply to the reports themselves. The 

Bureau notes that this phrase (‘‘written 

comments and other documents’’) is not 

explicitly provided for in the definition 

of ‘‘valuation’’ in ECOA section 

701(e)(6), and a number of commenters 

suggested that the phrase may be 

susceptible to uncertainty that could 

lead to overburdening creditors and 

consumers with the disclosure of 

information that is background in 

nature. The Bureau further notes that, in 

the absence of a definition of 

‘‘appraisal’’ within ECOA, a 1993 

amendment to the definition of an 

appraisal report in the commentary to 

Regulation B (58 FR 65658, 65659) had 

included this phrase ‘‘written comments 

and other documents.’’ In light of the 

inclusion in section 701(e) of ECOA of 

a definition of ‘‘valuation’’ that is broad 

enough to include appraisal reports, and 

the comments received, the Bureau does 

not believe a general reference to 

ancillary and supplementary 

information is useful to include in the 

list. Instead, the Bureau has added 

comment 14(b)(3)–2 in the final rule to 

clarify that the term ‘‘valuation’’ 

includes any attachments or exhibits 

that are part of an integrated valuation 

report. The Bureau believes that this 

comment is clearer, more specific, and 

addresses the commenters’ concerns 

over uncertainty in the meaning of the 

phrase ‘‘written comments and other 

documents.’’ Under this comment in the 

final rule, for example, if a creditor 

receives an AVM report that has a list 

of comparable properties included as an 

exhibit or an attachment, then a copy of 

this exhibit or attachment would need 

to be provided. This comment therefore 

should ensure that consumers receive a 

copy of the complete, integrated report, 

without being distracted or burdened by 

additional ancillary information that 

falls outside the four corners of the 

report. Comment 14(b)(3)–1 also 

clarifies, however, that the list of 

examples is not exhaustive. Ultimately, 

the definition of ‘‘valuation’’ in 

§ 1002.14(b)(3) governs. 

For clarity and consistency across the 

examples in the final rule, the Bureau 

has revised the second proposed 

example to make clear that an internal 

creditor valuation must be disclosed, 

regardless of whether a third-party 

appraisal report is prepared. As a result 

of this change, the third proposed 

example—internal review documents 

reflecting the creditor valuation—was 

removed as largely duplicative. This 

deletion also addresses industry 

commenters’ concerns that internal 

review documents, such as quality 

checks, fraud checks, automated 

underwriting determinations that do not 

estimate the value of the dwelling (such 

as certain GSE tools that simply suggest 

another valuation is excessive), or 

expressions of criticism of a valuation, 

should not be treated as themselves 

being valuations. 

In response to GSE comments that 

they do not ‘‘require’’ use of their 

valuation methods, the Bureau has 

revised the example relating to GSE 

valuations to delete the word 

‘‘required’’, which also is not used in 

the statute. The statute simply refers to 

values developed ‘‘pursuant to a policy 

of a government sponsored enterprise.’’ 

To provide additional guidance, this 

example in the comment now refers to 

GSE-approved forms for disclosing to 

consumers values developed pursuant 

to proprietary GSE mechanisms and 

methodologies.88 This revision also 

should help to clarify the type of GSE 

automated tools whose output would be 

considered valuations. 

The Bureau is finalizing inclusion of 

valuations developed by AVMs in the 

list of examples because they are 

included in the statutory list of 

valuation types in section 701(e)(6). The 

Bureau does not believe that the 

potential for AVM valuations to be 

coded or difficult for some consumers to 

understand is a basis for excluding them 

from the disclosure requirement. 

Consistent with the purpose of ECOA 

section 701(e) and ECOA more broadly, 

if an AVM develops a valuation in 

connection with the application that is 

provided to the creditor, then the 

creditor has a duty under the final rule 

to disclose a copy to the applicant. 

While some AVMs may use proprietary 

methods, the final rule does not require 

the disclosure of these methods per se; 

rather, the final rule requires disclosure 

of the written valuations developed by 

the AVMs which are provided to the 

creditors.89 That is, the revised list of 

examples focuses on the report 

generated by the AVM to estimate the 

property’s value, as opposed to the 

AVM methodology itself. Because AVM 

providers have control over such 

output, it should be within their control 

to ensure such output does not reveal 

proprietary information. Similarly, to 

the extent AVM reports are complex and 

coded, and creditors wish to voluntarily 

educate consumers, the creditors may 

provide additional explanatory 

information to the applicant at the time 

the AVM report is provided or request 

that the AVM generate such 

information. The rule does not require 

that creditors do so, however. 

The Bureau also does not believe it 

would be appropriate to define the term 

‘‘automated valuation model’’ in 

comment 14(b)(3)–1. When in receipt of 

a particular computer-generated report 

that may provide an estimate of the 

value of the dwelling, the creditor 

ultimately must make its own judgment 

of whether that report meets the 

definition of valuation in 

§ 1002.14(b)(3). The final rule cannot 

foresee all the types of computergenerated reports that might include 

valuations. Moreover, comment 

14(b)(3)–1 is merely intended as a list of 

examples of valuations. In addition, 

section 1473 of the Dodd-Frank Act 

amends a different statute—FIRREA—to 

define the term ‘‘automated valuation 

model’’ for purposes of that statute as 

‘‘any computerized model’’ used to 

determine the value of a dwelling that 

secures a mortgage. That definition 

would be implemented by a separate 

inter-agency rulemaking. 

Further, the Bureau does not believe 

that changes to the text of the regulation 

or commentary are needed to address 

the appraisal industry comments on the 

references to appraisers ‘‘whether or not 

licensed or certified’’ and to broker 

price opinions in the list of examples of 

valuations. The final rule does not 

regulate, or purport to regulate, the use 

of valuations such as broker price 

opinions by creditors. By referring to an 

example of a valuation, the final rule 

also does not suggest such a valuation 

would be permitted in any specific 

transaction, or that the person preparing 

such a valuation would be qualified. 

The list of examples that do not 

qualify as valuations, finalized in 

comment 14(b)(3)–3, is revised to refer 

to a manufacturer’s invoice for a 

‘‘manufactured home’’ instead of a 

‘‘mobile home,’’ consistent with the 

comment indicating that the term 


tkelley on DSK3SPTVN1PROD with 
7240 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

90The phrase ‘‘mobile or other manufactured 

home’’ is retained in the definition of ‘‘dwelling’’ 

in § 1002.14(b)(2), however, to ensure internal 

consistency with the other definition of ‘‘dwelling’’ 

in Regulation B at § 1002.13(a)(2). 

91The GSE also requested further delayed 

implementation, in case these programs are 

extended very close to or after their expiration date 

at the end of 2013. 

92Even if GSE refinance or modification programs 

are extended very shortly at or after the end of 2013, 

and the GSEs elected not to prepare to implement 

this final rule until that time, this effective date 

would still leave a few weeks to prepare to provide 

a short appraisals disclosure to consumers who file 

new applications and to provide copies of 

appraisals and other valuations to consumers. 

‘‘manufactured home’’ is current 

industry usage.90 Removing the 

reference to ‘‘mobile home’’ in this 

example also aligns with the exclusion 

of motor vehicles from the scope of the 

final rule. 

The Bureau has considered the 

observations from manufactured 

housing industry commenters that data 

from the manufacturers’ invoice for 

manufactured homes is sometimes 

included as a factor in the lender’s 

calculation of the loan amount or 

maximum loan amount. For example, 

two industry commenters pointed to 

HUD Title I insurance underwriting 

criteria, under which the maximum 

Title I insurable loan amount for 

manufactured housing loans for new 

homes is based, in part, upon the 

manufacturer invoice amount. See HUD, 

TI–481, App. 2 at 3–4 (Apr. 2009). The 

comments did not provide information 

that would clearly establish a basis for 

categorically determining that loan 

amounts, maximum loan amounts, or 

loan-to-value calculations are not 

valuations under the final rule, 

however. These creditor calculations, if 

they would otherwise be valuations, 

would not lose such status merely by 

taking into account manufacturer 

invoice information. Indeed, the 

comments did not provide a rationale 

for why an applicant should be barred 

from viewing a valuation that contains 

manufacturer invoice data, if the 

creditor has received information from 

that invoice and used it in a valuation. 

The list of examples that would not be 

covered by the rule also is revised to 

clarify that property inspection reports 

are not valuations, if they do not 

provide an estimate or opinion of the 

property’s value and are not used in the 

development of such an estimate or 

opinion. This example is added to 

address several comments seeking 

clarification about a variety of property 

reports that may be provided in the 

underwriting process. 

Finally, the comment clarifies that the 

list is not exhaustive. Again, the 

definition of ‘‘valuation’’ in 

§ 1002.14(b)(3) governs. This serves to 

emphasize that the commentary cannot 

exhaustively catalog all of the types of 

documents that might or might not fit 

the definition of ‘‘valuation.’’ The final 

rule seeks to address those comments 

the Bureau believes point to the most 

common types of documents that may 

raise the most significant questions 

under the final rule. 

VI. Effective Date 

This final rule is effective on January 

18, 2014. The Bureau requested 

comment on the effective date of the 

final rule, particularly given the 

likelihood that the TILA–RESPA Loan 

Estimate containing the ECOA appraisal 

disclosure would not be finalized on the 

same timeline as this final rule. These 

comments and the Bureau’s 

consideration of them are described 

below. As discussed above in part III, 

the Bureau believes that this effective 

date is consistent with the timeframes 

established in section 1400(c) of the 

Dodd-Frank Act and, on balance, will 

facilitate the implementation of the 

rules’ overlapping provisions, while 

also affording creditors sufficient time 

to implement the more complex or 

resource-intensive new requirements. 

A. Public Comments 

Many industry commenters suggested 

that the effective date of the rule, or at 

least the disclosure requirement, should 

be delayed at least until the integrated 

TILA–RESPA Loan Estimate is finalized 

by the Bureau and the associated TILA– 

RESPA rule takes effect. One large 

lending institution suggested that the 

final ECOA rule take effect 12 months 

after the effective date for other rules 

under the Dodd-Frank Act that had 

mandatory statutory deadlines. Two 

industry group commenters suggested 

that the Bureau seek ways to avoid 

staggered effective dates of these rules, 

which in their view would be wasteful 

because it would require that lenders 

update their systems twice—once for 

the ECOA rule, and then again when the 

TILA–RESPA Loan Estimate takes effect. 

Other commenters supported the use 

of a specific time period to set the rule’s 

effective date, whether late 2013, 12 

months, 18–24 months, or two years. A 

GSE also suggested that the rule take 

effect after 2013, to avoid interfering 

with home modification and refinance 

programs scheduled to end by late 2013 

so that resources currently used to 

support the GSE-administered refinance 

and modification programs do not have 

to be diverted to systems and process 

changes that would in any event be 

short-lived.91

B. Discussion 

The final rule will be effective on 

January 18, 2014. Thus, the final rule 

applies to loans to be secured by first 

liens on dwellings for which an 

application is received by the creditor 

on or after January 18, 2014. 

The Bureau believes this transition 

period will provide sufficient time for 

creditors to make changes to their 

appraisal disclosures and their practices 

for providing copies of appraisals and 

other written valuations. The Bureau 

does not believe a later effective date, 

such as 18 or 24 months after issuance 

of this final rule, is necessary. Appraisal 

disclosures are already required by 

Regulation B and provided by creditors, 

the final rule allows for creditors to 

continue to make these disclosures 

electronically (even without compliance 

with the E-Sign Act if they are provided 

as an accompaniment to application 

documents), and creditors should not 

need to undertake complex dynamic 

systems programming to update this 

disclosure. In addition, copies of 

appraisals already are provided to 

applicants as a routine practice in most 

transactions covered by the final rule. 

While providing copies of valuations 

other than appraisals may be new in 

some transactions, the Bureau believes 

12 months is sufficient time for 

creditors to prepare to include these 

with other materials (such as copies of 

appraisals) that already are provided to 

applicants as a routine practice in first 

lien transactions.92 In addition, as noted 

in the proposal, the Bureau believes it 

is important that consumers begin to 

receive disclosures with information on 

their new rights under ECOA with 

respect to appraisals. 

Further, if the effective date of the 

ECOA rule were delayed more than 12 

months, then it would take effect after 

the 2013 Interagency Appraisals Final 

Rule under TILA section 129H, which 

must take effect within 12 months after 

its issuance pursuant to section 

1400(c)(1)(B) of the Dodd-Frank Act. 

Because these rules under ECOA section 

701(e) and TILA section 129H cover a 

similar subject matter (appraisals), with 

harmonized disclosure requirements, 

relating to an overlapping set of 

transactions (loans secured by first liens 

on dwellings), the Bureau believes it is 

important for these rules to take effect 

at the same time. The Bureau believes 

that staggered effective dates for the 

ECOA and TILA rules could increase 

complexity and burden rather than ease 

compliance. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7241 

93Specifically, section 1022(b)(2)(A) calls for the 

Bureau to consider the potential benefits and costs 

of a regulation to consumers and covered persons, 

including the potential reduction of access by 

consumers to consumer financial products or 

services; the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in section 1026 of the Act; and the 

impact on consumers in rural areas. 

94The Bureau has discretion in any rulemaking 

to choose an appropriate scope of analysis with 

respect to potential benefits and costs and an 

appropriate baseline. The Bureau, as a matter of 

discretion, has chosen to describe a broader range 

of potential effects to inform the rulemaking more 

fully. 

95The Home Mortgage Disclosure Act (HMDA), 

enacted by Congress in 1975, as implemented by 

the Bureau’s Regulation C requires lending 

institutions annually to report public loan-level 

data regarding mortgage originations. For more 

information, see http://www.ffiec.gov/hmda. It 

should be noted that not all mortgage lenders report 

Continued 

As noted above, commenters raised 

concerns over the potential cost or 

burden of phased compliance, first with 

an ECOA disclosure requirement, and 

second with a rule on integrated TILA– 

RESPA disclosures. The Bureau does 

not believe, however, that it is 

appropriate to delay the consumer 

protections mandated by section 1474 of 

the Dodd-Frank Act for the 2012 TILA– 

RESPA Proposal, which would not even 

apply to some transactions covered by 

the ECOA Appraisals Rule. See 77 FR 

51116 (Aug. 23, 2012). The disclosure 

required by the final rule will provide 

consumers with important information 

about their rights under ECOA. In 

addition, for transactions covered by the 

ECOA Appraisals Rule that also would 

be covered by the Bureau’s 2012 TILA– 

RESPA Proposal, the Bureau does not 

believe it would significantly increase 

burden to set an earlier effective date for 

the ECOA Appraisals Rule. Under the 

2012 TILA–RESPA Proposal, creditors 

in these transactions could simply adopt 

a TILA–RESPA Loan Estimate that 

includes the appraisals disclosure and 

therefore satisfies the ECOA Appraisals 

Rule. 

VII. Dodd-Frank Act Section 1022(b)(2) 

Analysis 

In developing the final rule, the 

Bureau has considered potential 

benefits, costs, and impacts.93 The 

proposal set forth a preliminary analysis 

of these effects, and the Bureau 

requested comments and received some 

comments on this topic. In addition, the 

Bureau has consulted, or offered to 

consult with, the prudential regulators, 

FHFA, HUD, and the Federal Trade 

Commission (FTC), including regarding 

consistency with any prudential, 

market, or systemic objectives 

administered by such agencies. 

The final rule amends Regulation B, 

which implements ECOA, and the 

official interpretations to the regulation, 

which interpret and clarify the 

requirements of Regulation B. The 

revisions to Regulation B implement an 

ECOA amendment concerning 

appraisals and other valuations that was 

enacted as part of the Dodd-Frank Act. 

In general, the revisions to Regulation B 

require creditors to provide a free copy 

of each appraisal and other written 

valuation developed in connection with 

an application for a loan to be secured 

by a first lien on a dwelling. The final 

rule also requires creditors to notify 

applicants in writing of the right to 

receive a copy of each written appraisal 

at no additional cost. 

The amendment to ECOA section 

701(e) is self-effectuating, and the DoddFrank Act does not require the Bureau 

to adopt a regulation to implement these 

amendments. Thus, many costs and 

benefits of the final rule considered 

below would arise largely or entirely 

from the statute, not from the final rule. 

The final rule would provide substantial 

benefits compared to allowing the 

amendment to ECOA section 701(e) to 

take effect alone. These benefits arise 

because the final rule clarifies parts of 

the statute that call for interpretation, 

such as the definition of ‘‘valuation’’ in 

section 701(e)(6), the provision 

governing reimbursement of the creditor 

for certain costs in section 701(e)(3), and 

the timing requirement for providing 

copies of appraisals and other written 

valuations in section 701(e)(1). Greater 

clarity on these issues should reduce the 

compliance burdens on covered persons 

by reducing costs for attorneys and 

compliance officers as well as potential 

costs of over-compliance and 

unnecessary litigation. In this light, the 

costs that the regulation would impose 

beyond those imposed by the statute 

itself are likely to be at most minimal. 

Section 1022 permits the Bureau to 

consider the benefits, costs, and impacts 

of the final regulation solely compared 

to the state of the world in which the 

statute takes effect without an 

implementing regulation. To provide 

the public better information about the 

benefits and costs of the statute, 

however, the Bureau has chosen to 

consider the benefits, costs, and impacts 

of the major provisions of the final rule 

against a pre-statutory baseline (i.e., the 

benefits, costs, and impacts of the 

relevant provisions of the Dodd-Frank 

Act and the regulation combined).94

Section 1022 of the Dodd-Frank Act 

requires that the Bureau, in adopting the 

rule, consider potential benefits and 

costs to consumers and covered persons 

resulting from the rule, including the 

potential reduction of access by 

consumers to consumer financial 

products or services resulting from the 

rule, as noted above; it also requires the 

Bureau to consider the impact of its 

rules on covered persons described in 

section 1026 and the impact on 

consumers in rural areas. These 

potential benefits and costs, and these 

impacts, however, are not generally 

susceptible to particularized or 

definitive calculation in connection 

with this rule. The incidence and scope 

of such potential benefits and costs, and 

such impacts, will be influenced very 

substantially by economic cycles, 

market developments, and business and 

consumer choices that are substantially 

independent from adoption of the rule. 

No commenter has advanced data or 

methodology that it claims would 

enable precise calculation of these 

benefits, costs, or impacts. 

In considering the relevant potential 

benefits, costs, and impacts, the Bureau 

has utilized the available data discussed 

in this preamble, where the Bureau has 

found it informative, and applied its 

knowledge and expertise concerning 

consumer financial markets, potential 

business and consumer choices, and 

economic analyses that it regards as 

most reliable and helpful, to consider 

the relevant potential benefits and costs, 

and relevant impacts. The data relied 

upon by the Bureau also includes the 

public comment record established by 

the proposed rule. The Bureau notes, 

however, that for some aspects of this 

analysis, in particular with respect to 

the benefits of the rule, there are limited 

data available with which to quantify 

the potential impacts of the final rule. 

In light of these data limitations, the 

analysis below generally provides a 

qualitative discussion of the benefits of 

the final rule. General economic 

principles, together with the limited 

data that are available, provide insight 

into these benefits. Where possible, the 

Bureau has made quantitative estimates 

based on these principles and the data 

that are available; these estimates are 

primarily with regard to the costs of the 

rule. For the reasons stated in this 

preamble, the Bureau considers that the 

rule as adopted faithfully implements 

the purposes and objectives of Congress 

in the statute. Based on each and all of 

these considerations, the Bureau has 

concluded that the rule is appropriate as 

an implementation of the Dodd-Frank 

Act. 

The primary source of data used in 

this analysis is data collected under the 

Home Mortgage Disclosure Act 

(HMDA).95 Because the latest complete 


tkelley on DSK3SPTVN1PROD with 
7242 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

HMDA data. The HMDA data capture roughly 90– 

95 percent of lending by the Federal Housing 

Administration and 75–85 percent of other first-lien 

home loans, in both cases including first liens on 

manufactured homes (transactions which also are 

subject to the final rule). U.S. Dep’t of Hous. & 

Urban Dev., Office of Policy Development and 

Research, ‘‘A Look at the FHA’s Evolving Market 

Shares by Race and Ethnicity,’’ U.S. Housing 

Market Conditions (May 2011), at 6–12. Depository 

institutions (including credit unions) with assets 

less than $40 million (in 2011), for example, and 

those with branches exclusively in nonmetropolitan areas and those that make no home 

purchase loan or loan refinancing a home purchase 

loan secured by a first lien on a dwelling are not 

required to report under HMDA. Reporting 

requirements for non-depository institutions 

depend on several factors, including whether the 

company made fewer than 100 home purchase 

loans or refinancings of home purchase loans, the 

dollar volume of mortgage lending as share of total 

lending, and whether the institution had at least 

five applications, originations, or purchased loans 

from metropolitan areas. Robert B. Avery et al., The 

Mortgage Market in 2011: Highlights from the Data 

Reported under the Home Mortgage Disclosure Act, 

98 Fed. Res. Bull. (Fed. Res. Sys.), Dec. 2012, n.6. 

96Every national bank, State member bank, and 

insured nonmember bank is required by its primary 

Federal regulator to file consolidated Reports of 

Condition and Income, also known as Call Report 

data, for each quarter as of the close of business on 

the last day of each calendar quarter (the report 

date). The specific reporting requirements depend 

upon the size of the bank and whether it has any 

foreign offices. For more information, see http:// 

www2.fdic.gov/call_tfr_rpts/. 

97The NMLS is a national registry of nondepository financial institutions including mortgage 

loan originators. Portions of the registration 

information are public. The Mortgage Call Report 

data are reported at the institution level and include 

information on the number and dollar amount of 

loans originated, the number and dollar amount of 

loans brokered. 

98Q3 2012 Experian-Oliver Wyman Market 

Intelligence Report. More information about the 

Experian-Oliver Wyman quarterly Market 

Intelligence Report is available at http:// 

www.marketintelligencereports.com. 

99The Bureau calculates that 26 percent of 

HELOCs are first liens from the 2010 SCF. 

100Monthly HUD HECM Endorsement Summary 

reports are available at http://www.hud.gov/pub/ 

chums/f17fvc/hecm.cfm. The non-HECM market for 

reverse mortgages has all but disappeared in recent 

years, so the Bureau believes the HECM count 

provides a reasonable estimate of reverse mortgage 

volume. 

101One commenter stated that GSEs charge $50 

to generate a report from their proprietary valuation 

tools. It was not clear from this comment that GSEs 

would impose additional charges for creditors to 

disclose the valuation results to consumers. GSEs 

did not mention any such charges in their 

comments. 

102The value of the information may vary 

depending on when in the home purchase and loan 

origination process the consumer receives the 

information. 

data set available is for loans made in 

calendar year 2011, the empirical 

analysis generally uses the 2011 market 

as the baseline. Data from fourth quarter 

2011 Reports of Condition and Income 

filed by federally-regulated banks and 

thrifts (Call Reports),96 fourth quarter 

2011 credit union call reports from the 

NCUA, and de-identified data from the 

Nationwide Mortgage Licensing System 

(NMLS) Mortgage Call Reports (MCR) 97

for the fourth quarter of 2011 were also 

used to identify financial institutions 

and their characteristics. The unit of 

observation in this analysis is the entity: 

If there are multiple subsidiaries of a 

parent company, then their originations 

are summed and revenues are total 

revenues for all subsidiaries. 

In addition, the Bureau notes that 

Regulation B generally applies to openend credit and business or commercial 

credit; accordingly, the final rule also 

applies to these types of credit to the 

extent they are secured by a first lien on 

a dwelling. Calculations from the 

Experian Oliver-Wyman analysis of 

credit bureau data in the Q3 2012 

Market Intelligence Reports 98 were used 

to estimate the number of home equity 

lines of credit (HELOCs) originated in 

2011, and the Survey of Consumer 

Finances (SCF) was used to calculate 

the proportion of HELOCs that are first 

liens.99 Reverse mortgages are believed 

to be predominantly first liens; counts 

of reverse mortgages are calculated from 

home equity conversion mortgages 

(HECM) in the HUD HECM 

Endorsement Summary Report.100

Several comments from large and 

small lending institutions indicated it is 

standard practice for lenders in first lien 

residential real estate transactions to 

provide consumers with copies of 

appraisals performed. One lending 

institution stated its belief this is not a 

widespread industry practice, however. 

The comments did not provide data on 

the extent to which other valuations are 

conducted in first lien transactions, and 

also did not provide data on the extent 

to which creditors provide applicants 

with copies of valuations other than 

appraisal reports under current lending 

practices.101 As discussed below, one 

commenter criticized the proposal’s 

estimate of $1.80 as the average increase 

in per-loan cost due to the rule. 

A large lending institution reported 

that in one month in 2012, more than 

2,000 appraisals it ordered were revised 

to correct misspellings or clerical errors. 

This information was provided to 

illustrate challenges creditors could face 

if prohibited from making minor, nonsubstantive corrections to valuations 

and appraisals within three days of 

closing, after the time frame in which 

copies should have been provided to the 

applicant absent a waiver. 

As discussed and addressed 

throughout this preamble, other 

commenters expressed general concerns 

about the burden of various aspects of 

the proposed rule. The Bureau has taken 

these comments into account in 

developing its final rule and in its 

analysis below. 

A. Potential Benefits and Costs to 

Covered Persons and Consumers 

Consumers. Because the final 

regulation requires creditors to deliver 

copies of written valuations, including 

appraisals, to consumers and creditors 

are explicitly prohibited from charging 

consumers for these copies, consumers 

do not bear any direct costs from the 

rule. As noted above and discussed 

further below, outreach indicated and 

GSE standards corroborated that it is 

standard practice for industry to provide 

copies of appraisals to applicants in first 

lien transactions that are consummated. 

Consumers therefore currently benefit 

from this industry practice already. The 

final rule provides a marginal increase 

in the number of transactions in which 

consumers will receive appraisals, and 

also ensures they will receive copies of 

other types of valuations (including in 

transactions where no appraisals are 

performed). 

Providing a free copy of any valuation 

consumers do not already receive 

provides consumers with details about 

the valuation and, in some cases, 

additional information on the condition 

of the property. Although consumers 

may receive some of this information 

from a home inspection or from an 

appraisal they would otherwise receive 

already under standard industry 

practice, each valuation provides the 

consumer with another independent 

evaluation. To the extent it would not 

already be provided to them, this 

detailed information may be particularly 

valuable to the consumer in a purchase 

transaction when the estimated value is 

less than their offer.102 In addition, 

consumers in transactions where 

appraisals are not conducted may not 

currently receive any information about 

the valuations developed in connection 

with their application. The final rule 

would therefore provide them with new 

information that may help them make 

decisions about their mortgage 

borrowing. 

The final rule changes the consumer’s 

right under Regulation B to obtain a 

copy from one where the consumer 

must request the copy to one where the 

copy is given as the default. 

Nonetheless, as noted above, it is 

standard industry practice to provide 

copies of appraisals in first lien 

transactions that are consummated. 

Thus the rule may result in more 

consumers obtaining copies of written 

appraisals in transactions that are not 

consummated because, despite low 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7243 

103See, e.g., John Beshears et al., The Importance 

of Default Options for Retirement Savings 

Outcomes: Evidence from the United States, Social 

Security Policy in a Changing Environment 169 

(Jeffrey Brown et al. eds., Univ. of Chi. Press); Eric 

Johnson & Daniel Goldstein. Do Defaults Save 

Lives?, 302 Science 1338 (2003). 

104For example, in Quan and Quigley’s 

theoretical model where buyers and seller have 

incomplete information, trades are decentralized, 

and prices are the result of pairwise bargaining, 

‘‘[t]he role of the appraiser is to provide information 

so that the variance of the price distribution is 

reduced.’’ Daniel Quan & John Quigley, Price 

Formation and the Appraisal Function in Real 

Estate Markets, 4 J. Real Est. Fin. and Econ. (1991). 

105Steven Levitt & Chad Syverson, Market 

Distortions When Agents are Better Informed: The 

Value of Information In Real Estate Transactions, 

90 Rev. Econ. & Stat. 599 (2008). 

106Peter Scott & Colin Lizieri, Consumer House 

Price Judgments: New Evidence of Anchoring and 

Arbitrary Coherence, 29 J. Prop. Rsch. 49 (2012). 

107Respondents include a large bank, a trade 

group of smaller depository institutions, and an 

IMB. 

108Based on its pre-proposal outreach and 

research, the Bureau assumes that the average 

appraisal is 20 pages long and that printing a copy 

of an appraisal costs $0.10 per page. In the 

proposal, the Bureau assumed that 84 percent of 

appraisals are sent via email and that these are 

already being sent in a manner that complies with 

the E-Sign Act, 15.75 percent of appraisals are sent 

via the United States Postal Service, and 0.25 

percent of appraisals are sent via courier. The final 

rule adopts this assumption, recognizing that some 

creditors, as reflected in comments received on the 

proposal, may elect not to provide copies 

electronically in compliance with the E-Sign Act 

(and therefore these copies would be provided as 

part of the 16 percent of copies that are sent via the 

postal service or courier). Because the Bureau does 

not have data, for purposes of this analysis, the 

Bureau conservatively assumes that the average 

non-appraisal valuation is as long as an appraisal 

(20 pages), that printing costs for valuations other 

than appraisals are the same as for appraisals, that 

currently, no written valuations other than 

appraisals are sent to applicants, and that the cost 

of sending copies of these valuations would be the 

same as an appraisal. Mailing an appraisal is 

assumed to cost $2.12 based on the cost of first class 

mail for a 3.7oz letter (20 pages of 20 lb paper 

weighs 3.2oz with a 0.5oz allowance for an 

envelope) and requires 5 minutes of loan officer 

time (a conservative assumption, because it is based 

on loan officer time rather than the time of a loan 

processor); sending an appraisal via a courier is 

assumed to cost $17 ($15 for courier fees and $2 for 

replication costs) in material costs and 5 minutes 

of loan officer time; and, sending a copy via email 

is assumed to cost $0.05 of material cost and 1 

minute of loan officer time. 109U.S. Gov’t Accountability Office, GAO–12– 

840T, Residential Appraisals, at 6–7 (June 28, 

2012). 

transaction costs, there is evidence that 

default rules can have significant effects 

on outcomes in various settings.103

Consumers who previously may have 

requested copies of appraisals in the 

absence of the amendment save the time 

and effort required to make requests. 

For those applicants who would not 

already receive a copy of an appraisal or 

other written valuation under existing 

practice, having a copy of any 

professional appraisal or other written 

valuation that is conducted as a point of 

reference may help them to gain a better 

understanding of the home’s value and 

improve overall market efficiency, 

relative to the case where the applicant 

has less information about the value of 

the property.104 Individual consumers 

engage in real estate transactions 

infrequently, and because the expertise 

to value real estate is costly consumers 

often rely on real estate agents and list 

prices to make price determinations. 

These methods may not lead a 

consumer to an accurate valuation of a 

property. For example, there is evidence 

that real estate agents sell their own 

homes for significantly more than other 

similar homes, which suggests that 

other sellers may not accurately price 

the homes that they are selling.105 Other 

research, conducted in a laboratory 

setting, provides evidence that 

individuals are sensitive to anchor 

values when estimating home prices.106

In such cases, an independent signal of 

the value of the home should benefit the 

consumer. 

Although the Bureau has not received 

comments from consumers on the 

proposed rule indicating any concerns, 

the Bureau believes that some 

consumers may not be interested in 

receiving copies of appraisals or other 

written valuations. While copies of 

appraisals are routinely provided in first 

lien transactions that are consummated, 

it is unclear that copies of other types 

of valuations are provided. For these 

consumers, the additional information 

received in copies of valuations may be 

unwelcome, or potentially distract their 

attention from other disclosures that are 

received shortly before consummation 

or account opening. The final rule seeks 

to reduce the volume of unnecessary 

information, by clarifying the list of 

examples of ‘‘valuations’’ and that 

multiple versions of the same valuation 

need not be provided so long as the 

timing requirements of the regulation 

are satisfied. 

In addition, the costs of the final rule 

may be indirectly passed on to 

consumers through very small increases 

in the cost of credit, largely associated 

with the costs of mailing copies to 

consumers who have not consented to 

receive them electronically under the ESign Act. Creditors also could charge for 

valuations—though this is not a 

consequence of the rule because 

creditors could charge for valuations 

now. These costs are discussed further 

below. 

Covered Persons. In the context of the 

final rule, ‘‘covered persons’’ includes 

depository institutions such as banks, 

credit unions, and thrifts, as well as 

non-depository creditors such as IMBs. 

The Bureau estimates that, of the 

roughly 14,700 depository institutions, 

about 11,400 originate mortgage loans. 

Another 2,800 non-depository 

institutions engage in real estate credit, 

based on data from the NMLS MCR. The 

final rule codifies the common practice 

of sending copies of all written 

appraisals to consumers who obtain 

loans secured by a first lien on a 

dwelling. In outreach to creditors prior 

to the proposal, all respondents reported 

providing copies of written appraisals to 

borrowers as a matter of course if a first 

lien loan is originated.107 This practice 

also aligns with pre-existing 

requirements of certain GSEs to provide 

copies of appraisals promptly and no 

later than three business days before 

closing, as discussed in the section-bysection analysis above. These GSEs 

participate in a substantial portion of 

first lien transactions each year. In 

addition, the final rule requires that 

copies of other written valuations be 

provided to the applicant, and that 

copies of written appraisals be sent in 

the event that an application is received 

but does not result in a loan being 

originated. The final rule prohibits 

creditors from charging consumers for 

these copies. The final rule does, 

however, eliminate the cost of 

responding to individual requests for 

copies of an appraisal on an ad hoc 

basis, which is currently required under 

Regulation B, § 1002.14. That is, the 

final rule eliminates any need to 

respond to ad hoc requests by querying 

a loan file, retrieving the appraisal, and 

then going through the process of 

sending copies of the appraisal to the 

applicant. 

Under the final rule, covered persons 

would incur the paperwork costs, for a 

set of applications and originations, of 

replicating and sending (either 

electronically or physically) copies of 

the appraisals and other written 

valuations.108 A recent government 

study found that appraisals are 

performed in about 90 percent of first 

lien transactions, and that non-appraisal 

valuations are obtained in first lien 

transactions in which an appraisal is not 

performed.109 The Bureau also believes 

that a second appraisal is conducted, 

and is sent, for any property with a loan 

size equal to or above $600,000. Further, 

appraisals are considered to be of 

inadequate quality 10 percent of the 

time, necessitating a second appraisal. 

Based on outreach to industry prior to 

the proposal, the Bureau assumes that 

creditors currently send to consumers 

copies of 100 percent of those written 

appraisals that are performed for an 

application for a transaction secured by 


tkelley on DSK3SPTVN1PROD with 
7244 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

110For reverse mortgage loan counts, since the 

HUD HECM Monthly Endorsement summary does 

not provide summary statistics of loans made by 

depository institutions of different asset sizes or 

non-depository institutions, when calculations are 

performed for separate classes of institutions, all 

HECMs are attributed to that class of institutions to 

create an upper bound of the cost of the regulation 

for that class. Similarly, for HELOC first lien loan 

counts, the Experian-Oliver Wyman data cannot be 

split by size of depository institution, so a parallel 

convention of attributing all depository institution 

costs to each class of depository institutions is 

followed. The number of first lien HELOCs is 

calculated by multiplying the number of HELOCs 

for depository institutions (242,710) and nondepository institutions (76,790) by the proportion of 

HELOCs that are first liens in the 2010 SCF (0.26). 

111This is a conservative estimate, particularly in 

the case of reverse mortgages, as the Bureau 

understands that creditors in HECM transactions 

already provide borrowers with copies of 

appraisals, or a completed HUD–92800.5B 

(Conditional Commitment Direct Endorsement 

Statement of Appraised Value). See U.S. Dep’t. of 

Hous. & Urban Dev., Asst. Sec’y for Hous., 

Mortgagee Letter 2005–ML–48 (Dec. 19, 2005). 

112Specifically, Poisson regressions are run 

projecting loan volumes in these categories on the 

natural log of the following characteristics available 

in the Call reports: total one-to-four family 

residential loan volume outstanding, full-time 

equivalent employees, and assets. The regressions 

are run separately for each category of depository 

institution. 

113The cost of reviewing the regulation at each 

institution is assumed to be the time cost of reading 

and reviewing the regulation, which is assumed to 

be 3 minutes per page for 9 pages. It is assumed that 

the regulation is reviewed by one lawyer and by one 

compliance officer at each institution, on average. 

Smaller institutions may not have a compliance 

officer, in which case additional implementation 

time would be assumed by the lawyer or other 

employee. Finally, the Bureau also believes that as 

part of routine software updates, creditors may 

make adjustments to software systems to ensure 

compliance with this rule (including updating the 

standard notice and incorporating additional 

valuation types into their copy distribution system); 

the Bureau does not believe these adjustments 

would impose significant additional costs beyond 

the existing routine upgrade processes. 

114A few industry commenters argued that the 

analysis did not adequately consider the proposal’s 

costs and benefits in the context of related 

rulemakings, including the aggregate effects of the 

new regulations on the U.S. economy. The Bureau, 

however, interprets the consideration required by 

section 1022(b)(2)(A) to be focused on the potential 

benefits, costs, and impacts of the particular rule at 

issue, and to not include those of other pending or 

potential rulemakings. Moreover, the commenters 

do not suggest a reliable method for assessing 

cumulative impacts of multiple rulemakings. The 

Bureau believes that there are multiple reasonable 

approaches for conducting the consideration called 

for by section 1022(b)(2)(A) and that the approach 

it has taken in this analysis is reasonable and that, 

particularly in light of the difficulties of reliably 

estimating certain benefits and costs, it has 

discretion to decline to undertake additional or 

different forms of analysis. The Bureau notes that 

it has coordinated the development of the final rule 

with its other rulemakings and has, as appropriate, 

discussed some of the significant interactions of the 

rulemakings. 

115 In addition, a significant part of the 

annualized costs is attributable to the minority of 

institutions that are assumed not to provide copies 

electronically. Over time, an increasing number of 

institutions may provide copies electronically. 

Therefore, this assumption is a conservative one. 

a first-lien on a dwelling that results in 

an origination. Because available data 

and outreach did not indicate otherwise, 

the Bureau conservatively assumes that 

copies of appraisals and other written 

valuations developed for applications 

that do not result in a transaction 

currently are not sent to consumers. 

Similarly, the Bureau conservatively 

assumes that copies of non-appraisal 

valuations currently are not sent to 

consumers. The burden calculations 

that follow assume that a non-appraisal 

written valuation is conducted for every 

application, which likely overstates the 

costs associated with the rule. 

As a result, the new paperwork costs 

under the final rule arise from providing 

copies of any written appraisals for the 

proportion of applications that do not 

result in originations (a proportion the 

Bureau estimates from HMDA data on 

applications and originations), and from 

providing copies of any non-appraisal 

valuations developed in connection 

with an application whether or not 

originated. 

The additional cost of providing a 

copy of any non-appraisal valuation in 

most cases will be limited to the cost of 

generating a copy of the non-appraisal 

valuation to send to the applicant. 

When the copy is generated in paper 

form, the Bureau estimates the cost of 

generating the copy based upon an 

assumption that the non-appraisal 

valuation is at most as long as the 

written appraisal. With respect to 

transmission costs, in the 90 percent of 

first lien transactions where an 

appraisal is conducted and a copy 

already provided, the copy of the nonappraisal valuation often can be 

included with the appraisal already 

being sent, which would only increase 

transmission costs in the small minority 

of cases where the copy is not sent 

electronically (because of the postal 

delivery or courier having a marginally 

greater weight). If the copy of the nonappraisal valuation needs to be 

provided at a different time than the 

copy of a written appraisal, however, 

the creditor would need to make a 

second transmission to the applicant, 

which for a majority of transactions 

using electronic communications, 

would involve the cost of an additional 

electronic transmission. To be 

conservative, for first-lien, closed-end, 

forward mortgage loans the Bureau 

calculates the cost of sending the nonappraisal valuation assuming that it is 

sent separately from the appraisal. 

Finally, in the 10 percent of first lien 

closed-end, forward mortgage 

transactions where only a non-appraisal 

valuation is prepared, the cost of 

generating the copy and transmission 

will be new. For the HECMs (reverse 

mortgages) and first lien HELOCs the 

Bureau estimates will be covered by the 

rule,110 the Bureau assumes that one 

appraisal or other written valuation 

beyond what is current standard 

practice will be provided.111

To measure these paperwork costs, 

counts of originations and applications 

for reporting depository institutions and 

credit unions are obtained from the 

HMDA data; for non-HMDA reporters, 

counts are imputed using accepted 

statistical techniques that allow 

estimates based on the data available in 

call reports.112 Different techniques are 

used to extrapolate from the 

applications and originations data 

available in HMDA for reporting IMBs 

to the broader set of all IMBs. 

Covered persons would also incur 

some costs in reviewing the final rule 

and in training the relevant 

employees.113 To estimate these costs, 

the number of loan officers who may 

require training is estimated based on 

the application or origination estimates. 

Finally, covered persons would incur 

some costs in updating Regulation B 

disclosures provided to applicants 

concerning appraisals. The cost of 

sending these disclosures would not 

change, however. In addition, some 

commenters suggested that nonappraisal valuations would be difficult 

for consumers to understand. While 

some creditors or valuation providers 

could choose to modify their reports to 

be more easily understood by the 

consumer audience, the rule does not 

require such modifications. 

Based upon the foregoing 

assumptions and estimates, costs from 

the final rule—including one-time costs 

and one year of annualized costs—are 

estimated to be approximately $39 

million, or approximately $5.05 for each 

loan originated.114 This estimated cost 

is higher than the estimate in the 

proposal principally because, in the 

absence of information provided 

otherwise by commenters on the 

proposal, the Bureau is including the 

estimated cost of providing copies of 

written valuations other than appraisals, 

and is not assuming that creditors 

already are providing copies of most of 

these other written valuations to 

applicants.115 The bulk of these costs 

arise from the paperwork requirements; 

roughly 1.8 percent results from the 

one-time review and training costs. This 

estimate is conservative because it does 

not take into account cost savings that 

will be achieved as a result of the final 

rule removing subordinate lien 

transactions from the scope of § 1002.14. 

These transactions currently are subject 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7245 

16Note that costs per-loan differ by institution 

class because the number of loans nd loan officers 

per-institution differ across institution classes. 

117 5 U.S.C. 605(b). For purposes of assessing the 

impacts of the final rule on small entities, ‘‘small 

entities’’ is defined in the RFA to include small 

businesses, small not-for-profit organizations, and 

small government jurisdictions. 5 U.S.C. 601(6). A 

‘‘small business’’ is determined by application of 

Small Business Administration regulations and 

reference to the North American Industry 

Classification System (NAICS) classifications and 

size standards. 5 U.S.C. 601(3). A ‘‘small 

organization’’ is any ‘‘not-for-profit enterprise 

which is independently owned and operated and is 

not dominant in its field.’’ 5 U.S.C. 601(4). A ‘‘small 

governmental jurisdiction’’ is the government of a 

city, county, town, township, village, school 

district, or special district with a population of less 

than 50,000. 5 U.S.C. 601(5). 

118 5 U.S.C. 609. 119 13 CFR Ch. 1. 

to the appraisal copy-on-request regime 

of § 1002.14. Under the final rule, these 

transactions would not be subject to 

§ 1002.14 and creditors in these 

transactions would not otherwise be 

required to provide copies of appraisals 

if the transaction is not a higher-pricedmortgage that is a closed-end 

transaction subject to the requirements 

of TILA section 129H and its 

implementing regulations in the 2013 

Interagency Appraisals Final Rule. 

B. Potential Reduction in Access by 

Consumers to Consumer Financial 

Products or Services 

Because the final rule, which largely 

codifies existing practice relating to 

appraisals, is limited to relatively lowcost clerical tasks and does not require 

the creditor to obtain any additional 

goods or services, the final rule is not 

likely to have an appreciable impact on 

the cost of credit for consumers or on 

loan volumes. 

C. Impact of the Final Rule on 

Depository Institutions and Credit 

Unions With $10 Billion or Less in Total 

Assets, as Described in Section 1026 of 

the Dodd-Frank Act, and the Impact of 

the Final Rule on Consumers in Rural 

Areas 

For depository institutions with total 

assets of $10 billion or less, the Bureau 

estimates that the cost of compliance 

with the final rule would be $9.3 

million. Because of their smaller size, 

fixed training and reviewing costs are 

spread over fewer applications and 

originations, and as a result the 

proportion of costs due to one-time 

burdens increases slightly to 3.0 percent 

of total cost. For each loan these 

institutions originate, the cost is 

estimated to be roughly $4.08.116

At least one commenter specifically 

questioned the estimated cost of $1.80 

per loan originated in the proposed rule. 

Specifically, the commenter argued that 

the language in proposed comment 

14(b)(3)–1, ‘‘including written 

comments and other documents 

submitted to the creditor in support of 

the estimate of the property value,’’ 

would require creditors to provide 

additional documentation that would 

exceed the estimate of $1.80 per loan 

originated. As previously discussed, the 

Bureau has made changes to the list of 

examples of valuations in the 

commentary to make clear that the rule 

does not require a creditor to provide 

written comments and other documents 

unless they are attachments or exhibits 

to an integrated valuation report. 

Accordingly, the Bureau has addressed 

the basis for the commenter’s concern 

over a potential for a higher cost. 

Furthermore, the Bureau has provided 

updated estimates of the per-loan cost 

which, as discussed above, include an 

estimate of the cost of providing copies 

of non-appraisal valuations. 

The Bureau does not expect that the 

final rule will have a unique impact on 

consumers in rural areas. 

VIII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to conduct 

an initial regulatory flexibility analysis 

(IRFA) and a final regulatory flexibility 

analysis (FRFA) of any rule subject to 

notice-and-comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities.117 The Bureau 

also is subject to certain additional 

procedures under the RFA involving the 

convening of a panel to consult with 

small business representatives prior to 

proposing a rule for which an IRFA is 

required.118 A FRFA is not required for 

this final regulation because the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

The final rule amends Regulation B, 

which implements ECOA, and the 

official interpretations to the regulation, 

which interpret and clarify the 

requirements of Regulation B. The 

revisions to Regulation B implement an 

ECOA amendment concerning 

appraisals and other valuations that was 

enacted as part of the Dodd-Frank Act. 

In general, the revisions to Regulation B 

require creditors to provide free copies 

of all appraisals and written valuations 

developed in connection with an 

application for a loan to be secured by 

a first lien on a dwelling. The final rule 

also requires creditors to notify 

applicants in writing of the right to 

receive a copy of each written appraisal 

at no additional cost. 

The empirical approach to calculating 

the impact of the final regulation on 

small entities subject to its requirements 

utilizes the same data and methodology 

outlined in Part VII above. The analysis 

that follows focuses on the economic 

impact of the final rule, relative to a prestatute baseline, for small depository 

institutions, credit unions and nondepository IMBs. 

The Small Business Administration 

classifies commercial banks, savings 

institutions, credit unions, and other 

depository institutions as small if they 

have assets less than $175 million, and 

classifies other real estate credit firms as 

small if they have less than $7 million 

in annual revenues.119 All creditors that 

extend real estate credit secured by a 

first lien on a dwelling are affected by 

the final rule. As shown below, the vast 

majority of small banks, thrifts, credit 

unions, and IMBs originate such loans. 

The estimates provided here are based 

upon data and statistical analyses 

performed by the Bureau. To estimate 

counts and properties of mortgages for 

entities that do not report under HMDA, 

the Bureau has matched HMDA data to 

Call Report data and NMLS and has 

statistically projected estimated loan 

counts for those depository institutions 

that do not report these data either 

under HMDA or on the NCUA call 

report. These projections use Poisson 

regressions that estimate loan volumes 

as a function of an institution’s total 

assets, employment, mortgage holdings 

and geographic presence. 

Of the roughly 17,462 depository 

institutions, credit unions, and IMBs, 

12,568 are below the relevant small 

entity thresholds. Of these, 9,373 are 

estimated to have originated mortgage 

loans in 2011. The Bureau has loan 

counts for credit unions and HMDAreporting DIs and IMBs. 


tkelley on DSK3SPTVN1PROD with 
7246 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

120All other assumptions regarding costs are the 

same as those used in the analysis under Section 

1022(b)(2). These include the following 

assumptions regarding wages based on the Bureau 

of Labor Statistics Occupation Employment Survey 

2011: at depository institutions, loan officer wages 

are assumed to $31.69 per hour, lawyer wages are 

$77.31 per hour, and compliance officer wages are 

$30.41 per hour. At non-depository institutions, 

loan officer wages are assumed to be $32.16 per 

hour, lawyer wages are assumed to be $75.83 per 

hour, and compliance officer wages are $34.66 per 

hour. These rates are then increased to reflect that 

wages represent 66.6 percent of an employee’s total 

compensation. 

121As noted above, costs per-loan differ by 

institution class because the number of loans and 

loan officers per-institution differ across institution 

classes. 

122 Industry experts estimate that gross revenues 

per loan are approximately 3 percent of origination 

amount. The MBA’s Mortgage Bankers Performance 

Report reports that in the 4th quarter of 2010 IMBs 

and subsidiaries reported that total production 

operating expenses were $4,930 per loan, average 

profits were $1,082 per loan, and average loan 

balance was $208,319. 

Although most depository 

institutions, credit unions, and IMBs are 

affected by the final rule, the burden 

estimates below show that the rule does 

not have a significant impact on a 

substantial number of small entities. As 

discussed above, the economic impacts 

include preparing and sending copies of 

appraisals and other written valuations 

and the costs of reviewing the rule, 

training employees, and updating 

consumer disclosures concerning 

appraisals. 

Consistent with the assumptions in 

the analysis of the previous section, the 

Bureau believes, based on its outreach 

prior to the proposal, that currently it is 

routine business practice for appraisals 

to be sent to consumers for all first-lien 

transactions that result in an origination 

and that copies of appraisals and other 

valuations conducted for applications 

that do not result in a loan are not sent 

to consumers. The Bureau also believes 

that a second appraisal is typically 

conducted, and is sent, for any property 

with a loan size equal to or above 

$600,000. Further, appraisals are 

considered to be of inadequate quality 

10 percent of the time, necessitating a 

second appraisal.120

Under these assumptions, the total 

costs for small depository institutions, 

credit unions, and small IMBs of 

providing copies of the appraisals and 

other written valuations and any onetime costs for reviewing the regulation 

and training employees are estimated to 

be roughly $4.64 per-loan originated.121

Across all small entities, the costs of the 

rule amount to a fraction of a percent of 

the revenue or profits from origination 

activity.122

Certification 

Accordingly, the undersigned certifies 

that this final regulation will not have 

a significant economic impact on a 

substantial number of small entities. 

IX. Paperwork Reduction Act 

A. Overview 

The Bureau’s information collection 

requirements contained in this final 

rule, and identified as such, have been 

submitted to the Office of Management 

and Budget (OMB) for review under 

section 3507(d) of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) (Paperwork Reduction Act or 

PRA). Further, the PRA (44 U.S.C. 

3507(a), (a)(2) and (a)(3)) requires that a 

Federal agency may not conduct or 

sponsor a collection of information 

unless OMB approved the collection 

under the PRA and the OMB control 

number obtained is displayed. Finally, 

notwithstanding any other provision of 

law, no person is required to comply 

with, or is subject to any penalty for 

failure to comply with, a collection of 

information does not display a currently 

valid OMB control number (44 U.S.C. 

3512). 

This final rule contains revised 

information collection requirements that 

have not been approved by the OMB 

and, therefore, are not effective until 

OMB approval is obtained. The 

unapproved information collection 

requirements contained in this rule are 

described below. The Bureau will 

publish a separate notice in the Federal 

Register announcing the submission of 

these information collection 

requirements to OMB as well as OMB’s 


tkelley on DSK3SPTVN1PROD with ER31JA13.030</GPH>
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7247 

123Outreach conversations prior to the proposal 

included a large bank, a trade group of smaller 

depository institutions, and an IMB. 

124There may be a small additional burden for 

privately insured credit unions estimated to 

originate mortgages. The Bureau will assume half of 

the burden on these institutions. 

action on these submissions; including, 

the OMB control number and expiration 

date. 

The title of this information collection 

is ECOA Appraisal Final Rule. The 

frequency of response is on-occasion. 

The final rule amends 12 CFR part 1002, 

Equal Credit Opportunity (Regulation 

B). Regulation B currently contains 

collections of information approved by 

OMB. The Bureau’s OMB control 

number for Regulation B is 3170–0013 

(Equal Credit Opportunity Act 

(Regulation B) 12 CFR part 1002). As 

described below, the final rule would 

amend the collections of information 

currently in Regulation B. 

The information collection in the final 

rule is required to provide benefits for 

consumers and is mandatory. Because 

the Bureau does not collect any 

information under the final rule, no 

issue of confidentiality arises. The likely 

respondents would be certain 

businesses, for-profit institutions, and 

nonprofit institutions that are creditors 

under Regulation B. 

Under the final rule, the Bureau 

generally accounts for the paperwork 

burden for the following respondents 

pursuant to its enforcement/supervisory 

authority: insured depository 

institutions with more than $10 billion 

in total assets, their depository 

institution affiliates, and certain nondepository institutions. The Bureau and 

the FTC generally both have 

enforcement authority over nondepository institutions subject to 

Regulation B. Accordingly, the Bureau 

has allocated to itself half of the final 

rule’s estimated burden to nondepository institutions. Other Federal 

agencies, including the FTC, are 

responsible for estimating and reporting 

to OMB the paperwork burden for the 

institutions for which they have 

enforcement/supervision authority. 

They may use the Bureau’s burden 

estimation methodology, but need not 

do so. 

Using the Bureau’s burden estimation 

methodology, the total estimated burden 

for the roughly 14,200 creditors 

originate mortgages and therefore are 

subject to the final rule, including 

Bureau respondents, would be 

approximately 519,000 hours of ongoing 

burden annually and 14,500 hours in 

one-time burden. Because creditors 

generally already provide consumers 

copies of appraisals if a first lien 

transaction closes, the Bureau assumes 

that there are no required software or 

information technology upgrades 

associated with implementing the rule 

for providing copies of appraisals in 

transactions that are consummated or 

where the account is opened. The 

Bureau assumes that creditors would 

make a one-time technology upgrade to 

incorporate additional documents into 

this disclosure practice that may not be 

currently provided to applicants. This 

estimate also accounts for time to 

review the rule and for staff training. 

Under the final rule, creditors will be 

required to provide applicants with 

copies of these documents, such as 

appraisals developed in transactions 

that are not consummated or where the 

account is not opened, and nonappraisal valuations developed for first 

lien transactions (including both the 

estimated 10 percent of first lien 

transactions that involve a valuation 

other than an appraisal, as well as a 

portion of the other 90 percent of first 

lien transactions where a valuation is 

obtained in addition to an appraisal). 

The Bureau expects that the amount of 

time required to implement each of the 

required changes for a given institution 

may vary based on the size, complexity, 

and practices of the respondent. 

B. Information Collection Requirements 

The information collection 

requirements in the final rule consist of 

the provision of copies of appraisals and 

other written valuations to applicants. 

Under the final rule, copies of all 

appraisals and other written valuations 

developed in connection with a 

creditor’s decision on an applicant for a 

loan to be secured by a first lien on a 

dwelling must be provided to the 

applicant free of charge promptly upon 

completion, or three business days 

before consummation or account 

opening, whichever is earlier, and these 

copies may be delivered physically or 

electronically. Currently, Regulation B 

requires that free copies of appraisals be 

provided upon request. From its 

outreach prior to the proposal, the 

Bureau learned that it is customary and 

in many cases already required by GSEs 

for creditors to send applicants a copy 

of all appraisals if the first lien loan 

closes, but firms differed in their 

practices of sending out copies of 

appraisals for such loans that did not 

close.123 The outreach prior to the 

proposal stage also did not establish that 

creditors have a consistent practice of 

providing copies of valuations other 

than appraisals in first lien transactions. 

Therefore, the Bureau considers the 

incremental paperwork burden 

associated with the final rule’s 

information collection requirements to 

be the cost of reviewing the rule, staff 

training, the one-time technology 

upgrade described above, sending out 

copies of non-appraisal valuations to 

applicants for first lien transactions, and 

sending out copies of appraisals and 

other written valuations to consumers 

who apply for loans that do not close 

but that reach the stage where an 

appraisal or other valuation is 

conducted. In some transactions in 

which more than one appraisal or other 

written valuation is conducted—a 

scenario that commenters did not state 

was frequent, but which nonetheless is 

assumed to be possible—separate 

transmissions to the applicant would be 

necessary, but only if they cannot both 

be provided promptly upon their 

respective completion in the same 

package. 

While the final rule requires the 

creditor to provide a short written 

disclosure concerning the appraisal 

process within three business days of 

application, this disclosure may be 

classified as a warning label supplied by 

the Federal government. Accordingly, 

this requirement is not ‘‘collection of 

information’’ for purposes of the PRA. 5 

CFR 1320.3(c)(2). 

C. Summary of Estimated Burden for 

Bureau Respondents 

The total annualized ongoing burden 

for the depository institutions and credit 

unions with more than $10 billion in 

assets (including their depository 

affiliates) that originate mortgage loans 

is estimated to be roughly 225,400 hours 

and the annualized ongoing burden for 

all non-depository institutions that 

originate mortgage loans is estimated to 

be approximately 171,300 hours. These 

respondents are estimated to incur an 

additional 5,200 hours and 4,000 hours 

in one-time burden, respectively. For 

purposes of the PRA analysis under this 

final rule, the Bureau would assume 

roughly 85,700 ongoing burden hours 

and 2,000 one-time hours for the nondepository institutions.124

The Bureau has a continuing interest 

in the public’s opinions of our 

collections of information. At any time, 

comments regarding the burden 

estimate, or any other aspect of this 

collection of information, including 

suggestions for reducing the burden, 

may be sent to: The Consumer Financial 

Protection Bureau (Attention: PRA 

Office), 1700 G Street NW., Washington, 

DC, 20552, or by the internet to 

CFPB_Public_PRA@cfpb.gov. 


tkelley on DSK3SPTVN1PROD with 
7248 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

List of Subjects in 12 CFR Part 1002 

Aged, Banks, Banking, Civil rights, 

Consumer protection, Credit, Credit 

unions, Discrimination, Fair lending, 

Marital status discrimination, National 

banks, National origin discrimination, 

Penalties, Race discrimination, 

Religious discrimination, Reporting and 

recordkeeping requirements, Savings 

associations, Sex discrimination. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Bureau amends 

Regulation B, 12 CFR part 1002, as set 

forth below: 

PART 1002—EQUAL CREDIT 

OPPORTUNITY ACT (REGULATION B) 

■ 1. The authority citation for Part 1002 

continues to read as follows: 

Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 

1691b. 

■ 2. Section 1002.4 is amended by 

revising paragraph (d)(2) to read as 

follows: 

§ 1002.4 General rules. 

* * * * * 

(d) * * * 

(2) Disclosures in electronic form. The 

disclosures required by this part that are 

required to be given in writing may be 

provided to the applicant in electronic 

form, subject to compliance with the 

consumer consent and other applicable 

provisions of the Electronic Signatures 

in Global and National Commerce Act 

(E-Sign Act) (15 U.S.C. 7001 et seq.). 

Where the disclosures under 

§§ 1002.5(b)(1), 1002.5(b)(2), 

1002.5(d)(1), 1002.5(d)(2), 1002.13, and 

1002.14(a)(2) accompany an application 

accessed by the applicant in electronic 

form, these disclosures may be provided 

to the applicant in electronic form on or 

with the application form, without 

regard to the consumer consent or other 

provisions of the E-Sign Act. 

■ 3. Section 1002.14 is revised to read 

as follows: 

§ 1002.14 Rules on providing appraisals 

and other valuations. 

(a) Providing appraisals and other 

valuations. (1) In general. A creditor 

shall provide an applicant a copy of all 

appraisals and other written valuations 

developed in connection with an 

application for credit that is to be 

secured by a first lien on a dwelling. A 

creditor shall provide a copy of each 

such appraisal or other written 

valuation 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. An applicant may waive the 

timing requirement in this paragraph 

(a)(1) and agree to receive any copy at 

or before consummation or account 

opening, except where otherwise 

prohibited by law. Any such waiver 

must be obtained at least three business 

days prior to consummation or account 

opening, unless the waiver pertains 

solely to the applicant’s receipt of a 

copy of an appraisal or other written 

valuation that contains only clerical 

changes from a previous version of the 

appraisal or other written valuation 

provided to the applicant three or more 

business days prior to consummation or 

account opening. If the applicant 

provides a waiver and the transaction is 

not consummated or the account is not 

opened, the creditor must provide these 

copies no later than 30 days after the 

creditor determines consummation will 

not occur or the account will not be 

opened. 

(2) Disclosure. For applications 

subject to paragraph (a)(1) of this 

section, a creditor shall mail or deliver 

to an applicant, not later than the third 

business day after the creditor receives 

an application for credit that is to be 

secured by a first lien on a dwelling, a 

notice in writing of the applicant’s right 

to receive a copy of all written 

appraisals developed in connection 

with the application. In the case of an 

application for credit that is not to be 

secured by a first lien on a dwelling at 

the time of application, if the creditor 

later determines the credit will be 

secured by a first lien on a dwelling, the 

creditor shall mail or deliver the same 

notice in writing not later than the third 

business day after the creditor 

determines that the loan is to be secured 

by a first lien on a dwelling. 

(3) Reimbursement. A creditor shall 

not charge an applicant for providing a 

copy of appraisals and other written 

valuations as required under this 

section, but may require applicants to 

pay a reasonable fee to reimburse the 

creditor for the cost of the appraisal or 

other written valuation unless otherwise 

provided by law. 

(4) Withdrawn, denied, or incomplete 

applications. The requirements set forth 

in paragraph (a)(1) of this section apply 

whether credit is extended or denied or 

if the application is incomplete or 

withdrawn. 

(5) Copies in electronic form. The 

copies required by § 1002.14(a)(1) may 

be provided to the applicant in 

electronic form, subject to compliance 

with the consumer consent and other 

applicable provisions of the Electronic 

Signatures in Global and National 

Commerce Act (E-Sign Act) (15 U.S.C. 

7001 et seq.). 

(b) Definitions. For purposes of 

paragraph (a) of this section: 

(1) Consummation. The term 

‘‘consummation’’ means the time that a 

consumer becomes contractually 

obligated on a closed-end credit 

transaction. 

(2) Dwelling. The term ‘‘dwelling’’ 

means a residential structure that 

contains one to four units whether or 

not that structure is attached to real 

property. The term includes, but is not 

limited to, an individual condominium 

or cooperative unit, and a mobile or 

other manufactured home. 

(3) Valuation. The term ‘‘valuation’’ 

means any estimate of the value of a 

dwelling developed in connection with 

an application for credit. 

■ 4. In Appendix C to Part 1002: 

■ A. Paragraph 1 is revised. 

■ B. Sample Form C–9 is revised. 

The revisions read as follows: 

Appendix C to Part 1002—Sample 

Notification Forms 

1. This Appendix contains ten sample 

notification forms. Forms C–1 through C–4 

are intended for use in notifying an applicant 

that adverse action has been taken on an 

application or account under §§ 1002.9(a)(1) 

and (2)(i) of this part. Form C–5 is a notice 

of disclosure of the right to request specific 

reasons for adverse action under 

§§ 1002.9(a)(1) and (2)(ii). Form C–6 is 

designed for use in notifying an applicant, 

under § 1002.9(c)(2), that an application is 

incomplete. Forms C–7 and C–8 are intended 

for use in connection with applications for 

business credit under § 1002.9(a)(3). Form C– 

9 is designed for use in notifying an 

applicant of the right to receive a copy of 

appraisals under § 1002.14. Form C–10 is 

designed for use in notifying an applicant for 

nonmortgage credit that the creditor is 

requesting applicant characteristic 

information. 

* * * * * 

Form C–9—Sample Disclosure of Right To 

Receive a Copy of Appraisals 

We may order an appraisal to determine 

the property’s value and charge you for this 

appraisal. We will promptly give you a copy 

of any appraisal, even if your loan does not 

close. 

You can pay for an additional appraisal for 

your own use at your own cost. 

* * * * * 

■ 5. In Supplement I to Part 1002— 

Official Interpretations: 

■ A. Under Section 1002.14, the heading 

is revised. 

■ B. Newly designated Section 1002.14 

is revised. 

■ C. Under Appendix C—Sample 

Notification Forms, paragraph 1 is 

revised. 

The revisions read as follows: 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 7249 

Supplement I To Part 1002—Official 

Interpretations 

* * * * * 

Section 1002.14—Rules on Providing 

Appraisals and Valuations 

14(a) Providing appraisals and other 

valuations. 

1. Multiple applicants. If there is more than 

one applicant, the written disclosure about 

written appraisals, and the copies of 

appraisals and other written valuations, need 

only be given to one applicant. However, 

these materials must be given to the primary 

applicant where one is readily apparent. 

Similarly, if there is more than one applicant 

for credit in the transaction, one applicant 

may provide a waiver under § 1002.14(a)(1), 

but it must be the primary applicant where 

one is readily apparent. 

14(a)(1) In general. 

1. Coverage. Section 1002.14 covers 

applications for credit to be secured by a first 

lien on a dwelling, as that term is defined in 

§ 1002.14(b)(2), whether the credit is for a 

business purpose (for example, a loan to start 

a business) or a consumer purpose (for 

example, a loan to purchase a home). 

2. Renewals. Section 1002.14(a)(1) applies 

when an applicant requests the renewal of an 

existing extension of credit and the creditor 

develops a new appraisal or other written 

valuation. Section 1002.14(a)(1) does not 

apply to the extent a creditor uses the 

appraisals and other written valuations that 

were previously developed in connection 

with the prior extension of credit to evaluate 

the renewal request. 

3. Written. For purposes of § 1002.14, an 

‘‘appraisal or other written valuation’’ 

includes, without limitation, an appraisal or 

other valuation received or developed by the 

creditor in paper form (hard copy); 

electronically, such as CD or email; or by any 

other similar media. See § 1002.14(a)(5) 

regarding the provision of copies of 

appraisals and other written valuations to 

applicants via electronic means. 

4. Timing. Section 1002.14(a)(1) requires 

that the creditor ‘‘provide’’ copies of 

appraisals and other written valuations to the 

applicant ‘‘promptly upon completion,’’ or 

no later than three business days before 

consummation (for closed-end credit) or 

account opening (for open-end credit), 

whichever is earlier. 

i. For purposes of this timing requirement, 

‘‘provide’’ means ‘‘deliver.’’ Delivery occurs 

three business days after mailing or 

delivering the copies to the last-known 

address of the applicant, or when evidence 

indicates actual receipt by the applicant, 

whichever is earlier. Delivery to or actual 

receipt by the applicant by electronic means 

must comply with the E-Sign Act, as 

provided for in § 1002.14(a)(5). 

ii. The application and meaning of the 

‘‘promptly upon completion’’ standard 

depends upon the facts and circumstances, 

including but not limited to when the 

creditor receives the appraisal or other 

written valuation, and the extent of any 

review or revision after the creditor receives 

it. 

iii. ‘‘Completion’’ occurs when the last 

version is received by the creditor, or when 

the creditor has reviewed and accepted the 

appraisal or other written valuation to 

include any changes or corrections required, 

whichever is later. See also comment 

14(a)(1)–7. 

iv. In a transaction that is being 

consummated (for closed-end credit) or in 

which the account is being opened (for openend credit), if an appraisal or other written 

valuation has been developed but is not yet 

complete, the deadline for providing a copy 

of three business days before consummation 

or account opening still applies, unless the 

applicant waived that deadline as provided 

under § 1002.14(a)(1), in which case the copy 

must be provided at or before consummation 

or account opening. 

v. Even if the transaction will not be 

consummated (for closed-end credit) or the 

account will not be opened (for open-end 

credit), the copy must be provided ‘‘promptly 

upon completion’’ as provided for in 

§ 1002.14(a)(1), unless the applicant has 

waived that deadline as provided under 

§ 1002.14(a)(1), in which case as provided for 

in § 1002.14(a)(1) the copy must be provided 

to the applicant no later than 30 days after 

the creditor determines the transaction will 

not be consummated or the account will not 

be opened. 

5. Promptly upon completion–examples. 

Examples in which the ‘‘promptly upon 

completion’’ standard would be satisfied 

include, but are not limited to, those in 

subparagraphs i, ii, and iii below. Examples 

in which the ‘‘promptly upon completion’’ 

standard would not be satisfied include, but 

are not limited to, those in subparagraphs iv 

and v below. 

i. Sending a copy of an appraisal within a 

week of completion with sufficient time 

before consummation (or account opening for 

open-end credit). On day 15 after receipt of 

the application, the creditor’s underwriting 

department reviews an appraisal and 

determines it is acceptable. One week later, 

the creditor sends a copy of the appraisal to 

the applicant. The applicant actually receives 

the copy more than three business days 

before the date of consummation (or account 

opening). The creditor has provided the copy 

of the appraisal promptly upon completion. 

ii. Sending a copy of a revised appraisal 

within a week after completion and with 

sufficient time before consummation (or 

account opening for open-end credit). An 

appraisal is being revised, and the creditor 

does not receive the revised appraisal until 

day 45 after the application, when the 

creditor immediately determines the revised 

appraisal is acceptable. A week later, the 

creditor sends a copy of the revised appraisal 

to the applicant, and does not send a copy 

of the initial appraisal to the applicant. The 

applicant actually receives the copy of the 

revised appraisal three business days before 

the date of consummation (or account 

opening). The creditor has provided the 

appraisal copy promptly upon completion. 

iii. Sending a copy of an AVM report 

within a week after its receipt and with 

sufficient time before consummation (or 

account opening for open-end credit). The 

creditor receives an automated valuation 

model (AVM) report on day 5 after receipt of 

the application and treats the AVM report as 

complete when it is received. On day 12 after 

receipt of the application, the creditor sends 

the applicant a copy of the valuation. The 

applicant actually receives the valuation 

more than three business days before the date 

of consummation (or account opening). The 

creditor has provided the copy of the AVM 

report promptly upon completion. 

iv. Delay in sending an appraisal. On day 

12 after receipt of the application, the 

creditor’s underwriting department reviews 

an appraisal and determines it is acceptable. 

Although the creditor has determined the 

appraisal is complete, the creditor waits to 

provide a copy to the applicant until day 42, 

when the creditor schedules the 

consummation (or account opening) to occur 

on day 50. The creditor has not provided the 

copy of the appraisal promptly upon 

completion. 

v. Delay in sending an AVM report while 

waiting for completion of a second valuation. 

The creditor receives an AVM report on day 

5 after application and completes its review 

of the AVM report the day it is received. The 

creditor also has ordered an appraisal, but 

the initial version of the appraisal received 

by the creditor is found to be deficient and 

is sent for review. The creditor waits 30 days 

to provide a copy of the completed AVM 

report, until the appraisal is completed on 

day 35. The creditor then provides the 

applicant with copies of the AVM report and 

the revised appraisal. While the appraisal 

report was provided promptly upon 

completion, the AVM report was not. 

6. Waiver. Section 1002.14(a)(1) permits 

the applicant to waive the timing 

requirement if the creditor provides the 

copies at or before consummation or account 

opening, except where otherwise prohibited 

by law. Except where otherwise prohibited 

by law, an applicant’s waiver is effective 

under § 1002.14(a)(1) in either of the 

following two situations: 

i. If, no later than three business days prior 

to consummation or account opening, the 

applicant provides the creditor an affirmative 

oral or written statement waiving the timing 

requirement under this rule; or 

ii. If, within three business days of 

consummation or account opening, the 

applicant provides the creditor an affirmative 

oral or written statement waiving the timing 

requirement under this rule and the waiver 

pertains solely to the applicant’s receipt of a 

copy of an appraisal or other written 

valuation that contains only clerical changes 

from a previous version of the appraisal or 

other written valuation provided to the 

applicant three or more business days prior 

to consummation or account opening. For 

purpose of this second type of waiver, 

revisions will only be considered to be 

clerical in nature if they have no impact on 

the estimated value, and have no impact on 

the calculation or methodology used to 

derive the estimate. In addition, under 

§ 1002.14(a)(1) the applicant still must 

receive the copy of the revision at or prior 

to consummation or account opening. 

7. Multiple versions of appraisals or 

valuations. For purposes of § 1002.14(a)(1), 

the reference to ‘‘all’’ appraisals and other 

written valuations does not refer to all 

versions of the same appraisal or other 


tkelley on DSK3SPTVN1PROD with 
7250 Federal Register / Vol. 78, No. 21 / Thursday, January 31, 2013 / Rules and Regulations 

valuation. If a creditor has received multiple 

versions of an appraisal or other written 

valuation, the creditor is required to provide 

only a copy of the latest version received. If, 

however, a creditor already has provided a 

copy of one version of an appraisal or other 

written valuation to an applicant, and the 

creditor later receives a revision of that 

appraisal or other written valuation, then the 

creditor also must provide the applicant with 

a copy of the revision to comply with 

§ 1002.14(a)(1). If a creditor receives only one 

version of an appraisal or other valuation that 

is developed in connection with the 

applicant’s application, then that version 

must be provided to the applicant to comply 

with § 1002.14(a)(1). See also comment 

14(a)(1)–4 above. 

14(a)(2) Disclosure. 

1. Appraisal independence requirements 

not affected. Nothing in the text of the 

disclosure required by § 1002.14(a)(2) should 

be construed to affect, modify, limit, or 

supersede the operation of any legal, 

regulatory, or other requirements or 

standards relating to independence in the 

conduct of appraisers or the use of applicantordered appraisals by creditors. 

14(a)(3) Reimbursement. 

1. Photocopy, postage, or other costs. 

Creditors may not charge for photocopy, 

postage, or other costs incurred in providing 

a copy of an appraisal or other written 

valuation in accordance with section 14(a)(1). 

2. Reasonable fee for reimbursement. 

Section 1002.14(a)(3) does not prohibit a 

creditor from imposing a reasonable fee to 

reimburse the creditor’s costs of the appraisal 

or other written valuation, so long as the fee 

is not increased to cover the costs of 

providing copies of such appraisals or other 

written valuations under § 1002.14(a)(1). A 

creditor’s cost may include an administration 

fee charged to the creditor by an appraisal 

management company as defined in 12 

U.S.C. 3350(11). Section 1002.14(a)(3) does 

not, however, legally obligate the applicant to 

pay such fees. Further, creditors may not 

impose fees for reimbursement of the costs of 

an appraisal or other valuation where 

otherwise prohibited by law. For instance, a 

creditor may not charge a consumer a fee for 

the performance of a second appraisal if the 

second appraisal is required under 15 U.S.C. 

1639h(b)(2) and 12 CFR 1026.35(c). 

14(b) Definitions. 

14(b)(1) Consummation. 

1. State law governs. When a contractual 

obligation on the consumer’s part is created 

is a matter to be determined under applicable 

law; § 1002.14 does not make this 

determination. A contractual commitment 

agreement, for example, that under 

applicable law binds the consumer to the 

credit terms would be consummation. 

Consummation, however, does not occur 

merely because the consumer has made some 

financial investment in the transaction (for 

example, by paying a nonrefundable fee) 

unless, of course, applicable law holds 

otherwise. 

2. Credit vs. sale. Consummation does not 

occur when the consumer becomes 

contractually committed to a sale transaction, 

unless the consumer also becomes legally 

obligated to accept a particular credit 

arrangement. 

14(b)(2) Dwelling. 

1. ‘‘Motor vehicles’’ not covered. The 

requirements of § 1002.14 do not apply to 

‘‘motor vehicles’’ as defined by 12 U.S.C. 

5519(f)(1). 

14(b)(3) Valuation. 

1. Valuations—examples. Examples of 

valuations include but are not limited to: 

i. A report prepared by an appraiser 

(whether or not licensed or certified) 

including the appraiser’s estimate or opinion 

of the property’s value. 

ii. A document prepared by the creditor’s 

staff that assigns value to the property. 

iii. A report approved by a governmentsponsored enterprise for describing to the 

applicant the estimate of the property’s value 

developed pursuant to the proprietary 

methodology or mechanism of the 

government-sponsored enterprise. 

iv. A report generated by use of an 

automated valuation model to estimate the 

property’s value. 

v. A broker price opinion prepared by a 

real estate broker, agent, or sales person to 

estimate the property’s value. 

2. Attachments and exhibits. The term 

‘‘valuation’’ includes any attachments and 

exhibits that are an integrated part of the 

valuation. 

3. Other documentation. Not all documents 

that discuss or restate a valuation of an 

applicant’s property constitute a ‘‘valuation’’ 

for purposes of § 1002.14(b)(3). Examples of 

documents that discuss the valuation of the 

applicant’s property or may reflect its value 

but nonetheless are not ‘‘valuations’’ include 

but are not limited to: 

i. Internal documents that merely restate 

the estimated value of the dwelling contained 

in an appraisal or written valuation being 

provided to the applicant. 

ii. Governmental agency statements of 

appraised value that are publically available. 

iii. Publicly-available lists of valuations 

(such as published sales prices or mortgage 

amounts, tax assessments, and retail price 

ranges). 

iv. Manufacturers’ invoices for 

manufactured homes. 

v. Reports reflecting property inspections 

that do not provide an estimate or opinion of 

the value of the property and are not used to 

develop an estimate or opinion of the value 

of the property. 

* * * * * 

Appendix C—Sample Notification Forms 

1. Form C–9. If not otherwise provided 

under other applicable disclosure 

requirements, creditors may design their own 

form, add to, or modify the model form to 

reflect their individual policies and 

procedures. For example, a creditor may 

want to add: 

i. A telephone number that applicants may 

call to leave their name and the address to 

which a copy of the appraisal or other 

written valuation should be sent. 

ii. A notice of the cost the applicant will 

be required to pay the creditor for the 

appraisal or other valuation. 

Dated: January 18, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–01384 Filed 1–28–13; 4:15 pm] 

BILLING CODE 4810–AM–P 


tkelley on DSK3SPTVN1PROD with