This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

50390 

Vol. 77, No. 162 

Tuesday, August 21, 2012 

1Public Law 111–203, 124 Stat. 1376, section 

1474 (2010). 

2 15 U.S.C. 1691 et seq. 

3Public Law 102–242, 105 Stat. 2236 (1991). 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1002 

[Docket No. CFPB–2012–0032] 

RIN 3170–AA26 

Equal Credit Opportunity Act 

(Regulation B) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

proposing to amend Regulation B, 

which implements the Equal Credit 

Opportunity Act (ECOA), and the 

official interpretation to the regulation, 

which interprets the requirements of 

Regulation B. The proposed revisions to 

Regulation B would implement an 

ECOA amendment concerning 

appraisals that was enacted as part of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act). In general, the proposed revisions 

to Regulation B would require creditors 

to provide free copies of all written 

appraisals and valuations developed in 

connection with an application for a 

loan to be secured by a first lien on a 

dwelling. The proposal also would 

require creditors to notify applicants in 

writing of the right to receive a copy of 

each written appraisal or valuation at no 

additional cost. 

DATES: Comments must be received on 

or before October 15, 2012, except that 

comments on the Paperwork Reduction 

Act analysis in part VIII of the 

Supplementary Information must be 

received on or before October 22, 2012. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2012– 

0032 or RIN 3170–AA26, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552 

• Hand Delivery/Courier in Lieu of 

Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: John 

H. Brolin, Counsel, or William W. 

Matchneer, Senior Counsel, Division of 

Research, Markets, and Regulations, 

Bureau of Consumer Financial 

Protection, 1700 G Street NW., 

Washington, DC. 20552, at (202) 435– 

7000. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule 

In response to the recent mortgage 

crisis, Congress amended the Equal 

Credit Opportunity Act (ECOA) to 

require creditors to automatically 

provide applicants with a copy of 

appraisal reports and valuations 

prepared in connection with certain 

mortgage loans. The Consumer 

Financial Protection Bureau (Bureau) is 

now proposing a rule to implement 

those changes, which were enacted in 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act).1 Specifically, the proposed rule 

would amend the regulations 

implementing ECOA to: 

• Cover 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 written appraisals and 

valuations developed. 

• Require creditors to provide 

applicants a copy of all written 

appraisals and valuations promptly after 

receiving an appraisal or valuation, but 

in no case later than three business days 

prior to consummation of the mortgage. 

• Permit applicants to waive the 

timing requirement to receive copies 

three days prior to consummation. 

However, applicants who waive the 

timing requirement must still be given 

a copy of all written appraisals and 

valuations at or prior to closing. 

• Prohibit creditors from charging 

additional fees for providing a copy of 

written appraisals and valuations, but 

permit creditors to charge applicants a 

reasonable fee to reimburse the creditor 

for the cost of the appraisal or valuation 

unless otherwise required by law. 

II. Statutory Background 

A. The Equal Credit Opportunity Act 

The ECOA 2 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, age (provided the 

applicant has the capacity to contract), 

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 all credit—commercial as 

well as consumer—without regard to the 

nature or type of the credit or the 

creditor. 

Historically, section 701(e) of ECOA 

has provided that a credit applicant has 

the right to request copies of appraisal 

reports used in connection with his or 

her application for mortgage credit. The 

right to request copies of appraisals was 

added to ECOA in December 1991 as 

part of the Federal Deposit Insurance 

Corporation Improvement Act 

(FDICIA).3 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 


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4For additional legislative history on the 

appraisal provision as originally added by the 

FDICIA see S. Rep. No. 167, 102d Cong., 1st Sess.; 

S. Rep. No. 461, 101st Cong. 2d Sess.; 137 Cong. 

Rec. S2519 (daily ed. February 28, 1991); 136 Cong. 

Rec. S14592, 14598–99 (daily ed. October 5, 1990). 

5Public Law 111–203, 124 Stat. 1376, section 

1474 (2010). 

6For more discussion of the mortgage market, the 

financial crisis, and mortgage origination generally, 

see the Bureau’s 2012 TILA–RESPA Proposal, 

available at http://www.consumerfinance.gov/ 

regulations/. 

7Sections 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. 

8See TILA sections 129H and 129E as established 

by Dodd-Frank Act sections 1471 and 1472, 15 

U.S.C. 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 sections 

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

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

9Public Law 111–203, 124 Stat. 1376, section 

1474 (2010). 

loan was denied due to a discriminatory 

appraisal.4

With the enactment of the DoddFrank Act,5 general rulemaking 

authority for ECOA transferred from the 

Board of Governors of the Federal 

Reserve System (Board) to the Bureau 

on July 21, 2011. 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 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 

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.6 The Dodd-Frank Act 

created the Bureau and consolidated 

various rulemaking and supervisory 

authorities in the new agency, including 

the authority to implement ECOA.7 At 

the same time, Congress imposed new 

statutory requirements governing 

mortgage practices with the intent to 

restrict the practices that contributed to 

the crisis and provide additional 

protections to consumers. 

Sections 1471 through 1474 of the 

Dodd-Frank Act established a number of 

new requirements for appraisal 

activities, including requirements 

relating to appraisal independence, 

appraisals for higher-risk mortgages, 

regulation of appraisal management 

companies, automated valuation 

models, and providing copies of 

appraisals and valuations.8 Many of the 

Dodd-Frank Act appraisal provisions are 

required to be implemented through 

joint rulemakings involving several 

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 notice and copy 

requirements of a Dodd-Frank Act 

amendment to the Truth in Lending Act 

(TILA) applicable to higher-risk 

mortgage loans. The Dodd-Frank Act 

amendment to TILA, which adds 

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 Appraisal Requirements 

Section 1474 of the Dodd-Frank Act 9

amended ECOA section 701(e) to 

require that creditors provide copies of 

appraisals and valuations to loan 

applicants at no additional cost and 

without requiring applicants to 

affirmatively request such copies. 

Amended ECOA section 701(e) 

generally provides that: 

• A creditor shall furnish to an 

applicant a copy of any and all written 

appraisals and 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 appraisal documentation must be 

provided promptly, 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 such 

appraisals or valuations be provided 

three days prior to closing, except where 

otherwise required by law. 

• The creditor shall provide a copy of 

each written appraisal or 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 written appraisal and 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 the same day that this proposal is 

released by the Bureau, the Bureau is 

also releasing a proposal to implement 

section 1471 of the Dodd-Frank Act, 

which added new appraisal 

requirements for higher-risk mortgages 

that are subject to joint implementation 

by the Board, Bureau, Federal Deposit 

Insurance Corporation (FDIC), Federal 

Housing Finance Agency (FHFA), 

National Credit Union Administration 

(NCUA), and Office of the Comptroller 

of the Currency, Treasury (OCC). This 

provision, which is codified in new 

TILA section 129H(d), contains 

disclosure requirements that are similar 

to ECOA section 701(e) in that creditors 

must provide consumers, 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 must also provide 

consumers, 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 (APOR) for a 

comparable transaction by a specified 

percentage. Id. 1639h(f). 

C. Other Rulemakings 

In addition to this proposal and the 

higher-risk mortgage rulemaking 

discussed above, the Bureau currently is 

engaged in six other rulemakings 

relating to mortgage credit to implement 

requirements of the Dodd-Frank Act: 

• TILA–RESPA Integration: On July 9, 

2012, the Bureau released a proposed 

rule and forms combining the TILA 

mortgage loan disclosures with the 

Good Faith Estimate (GFE) and 

settlement statement required under 

RESPA 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 


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50392 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

10Available at http://www.consumerfinance.gov/ 

notice-and-comment/. 

11 Id. 

12 Kleimann Communication Group, Inc., Know 

Before You Owe: Evolution of the Integrated TILA– 

RESPA Disclosures (July 9, 2012), http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 

13This discussion 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 

in proposed § 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 

TILA–RESPA Proposal).10 12 U.S.C. 

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

• HOEPA: On the same day that the 

Bureau released the 2012 TILA–RESPA 

Proposal, the Bureau also released a 

proposal to implement Dodd-Frank Act 

requirements expanding protections for 

‘‘high-cost’’ mortgage loans under 

HOEPA, pursuant to TILA sections 

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

(2012 HOEPA Proposal).11 15 U.S.C. 

1602(bb) and 1639. 

• Servicing: The Bureau is in the 

process of developing a proposal to 

implement Dodd-Frank Act 

requirements regarding force-placed 

insurance, error resolution, and 

payment crediting, as well as forms for 

mortgage loan periodic statements and 

‘‘hybrid’’ adjustable-rate mortgage reset 

disclosures, pursuant to sections 6 of 

RESPA and 128, 128A, 129F, and 129G 

of TILA, as amended or established by 

Dodd-Frank Act sections 1418, 1420, 

1463, and 1464. The Bureau has 

publicly stated that in connection with 

the servicing rulemaking the Bureau is 

considering proposing rules on 

reasonable information management, 

early intervention for troubled and 

delinquent borrowers, and continuity of 

contact, pursuant to the Bureau’s 

authority to carry out the consumer 

protection purposes of RESPA in section 

6 of RESPA, as amended by Dodd-Frank 

Act section 1463. 12 U.S.C. 2605; 15 

U.S.C. 1638, 1638a, 1639f, and 1639g. 

• Loan Originator Compensation: The 

Bureau is in the process of developing 

a proposal to implement provisions of 

the Dodd-Frank Act requiring certain 

creditors and mortgage loan originators 

to meet duty of care qualifications and 

prohibiting mortgage 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, pursuant to TILA section 

129B as established by Dodd-Frank Act 

sections 1402 and 1403. 15 U.S.C. 

1639b. 

• Ability to Repay: The Bureau is in 

the process of finalizing a proposal 

issued by the Board to implement 

provisions of the Dodd-Frank Act 

requiring creditors to determine that a 

consumer can repay a mortgage loan 

and establishing standards for 

compliance, such as by making a 

‘‘qualified mortgage,’’ pursuant to TILA 

section 129C as established by DoddFrank Act sections 1411 and 1412 

(Ability to Repay Rulemaking). 15 

U.S.C. 1639c. 

• Escrows: The Bureau is in the 

process of finalizing a proposal issued 

by the Board to implement provisions of 

the Dodd-Frank Act requiring certain 

escrow account disclosures and 

exempting from the higher-priced 

mortgage loan escrow requirement loans 

made by certain small creditors, among 

other provisions, pursuant to TILA 

section 129D as established by DoddFrank Act sections 1461 and 1462 

(Escrows Rulemaking). 15 U.S.C. 1639d. 

With the exception of the 

requirements being implemented in the 

TILA–RESPA proposal, the Dodd-Frank 

Act requirements referenced above 

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. To provide an 

orderly, coordinated, and efficient 

comment process, the Bureau is 

generally setting the deadlines for 

comments on this and other proposed 

mortgage rules based on the date the 

proposal is issued, instead of the date 

the notice is published in the Federal 

Register. Because the precise date of 

publication cannot be predicted in 

advance, this method will allow 

interested parties that intend to 

comment on multiple proposals to plan 

accordingly and will ensure that the 

Bureau receives comments with 

sufficient time remaining to issue final 

rules by January 21, 2013. However, 

consistent with the requirements of the 

Paperwork Reduction Act, the comment 

period for the proposed analysis under 

that Act will end 60 days after 

publication of this notice in the Federal 

Register. 

The Bureau regards the foregoing 

rulemakings as components of a larger 

undertaking; many of them intersect 

with one or more of the others. 

Accordingly, the Bureau is coordinating 

carefully the development of the 

proposals and final rules identified 

above. Each rulemaking will adopt new 

regulatory provisions to implement the 

various Dodd-Frank Act mandates 

described above. In addition, each of 

them may include other provisions the 

Bureau considers necessary or 

appropriate to ensure that the overall 

undertaking is accomplished efficiently 

and that it ultimately yields a regulatory 

scheme for mortgage credit that achieves 

the statutory purposes set forth by 

Congress, while avoiding unnecessary 

burdens on industry. 

Thus, many of the rulemakings listed 

above involve issues that extend across 

two or more rulemakings. In this 

context, each rulemaking may raise 

concerns that might appear unaddressed 

if that rulemaking were viewed in 

isolation. For efficiency’s sake, however, 

the Bureau is publishing and soliciting 

comment on proposed answers to 

certain issues raised by two or more of 

its mortgage rulemakings in whichever 

rulemaking is most appropriate, in the 

Bureau’s judgment, for addressing each 

specific issue. Accordingly, the Bureau 

urges the public to review this and the 

other mortgage proposals identified 

above, including those previously 

published by the Board, together. Such 

a review will ensure a more complete 

understanding of the Bureau’s overall 

approach and will foster more 

comprehensive and informed public 

comment on the Bureau’s several 

proposals, including provisions that 

may have some relation to more than 

one rulemaking but are being proposed 

for comment in only one of them. 

III. Outreach and Consumer Testing 

The Bureau has conducted consumer 

testing relating to implementation of 

ECOA section 701(e) requirements in 

conjunction with the 2012 TILA–RESPA 

Proposal. 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.12

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).13 The qualitative testing 


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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/. 

14See http://www.consumerfinance.gov/ 

knowbeforeyouowe. 

15 Kleimann Communication Group, Inc., Know 

Before You Owe: Evolution of the Integrated TILA– 

RESPA Disclosures 254–256 (July 9, 2012), http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 

16 Id. 17Public Law 111–203, 124 Stat. 1376, section 

1061(b)(7); 12 U.S.C. 5581(b)(7). 18 12 U.S.C. 5581(a)(1). 19 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). 

plan developed by the Bureau and 

Kleimann was unique with respect to 

qualitative testing performed by other 

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 it conducted the 

qualitative testing of the prototypes, 

which it titled ‘‘Know Before You 

Owe.’’ 14 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).15 The Bureau believed 

that it was important to test both 

appraisal-related disclosures together in 

order to determine how best to provide 

these two overlapping but separate 

disclosures in a manner that would 

minimize consumer confusion and 

improve consumer comprehension. 

Testing showed that consumers tended 

to find the TILA and ECOA disclosures 

confusing when they were given 

together using, in both cases, the 

specific language set forth in the 

statute.16 Consumer comprehension 

improved when the Bureau developed a 

slightly longer plain language disclosure 

that was designed to incorporate the 

elements of both statutes. Based on the 

results of that testing, the Bureau has 

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.’’ 

IV. Legal Authority 

The Bureau is issuing this proposed 

rule pursuant to its authority under 

ECOA, and the Dodd-Frank Act. On July 

21, 2011, section 1061 of the DoddFrank Act transferred to the Bureau all 

of the ‘‘consumer financial protection 

functions’’ previously vested in certain 

other Federal agencies, including the 

Board.17 The term ‘‘consumer financial 

protection function’’ 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.’’ 18

ECOA and title X of the Dodd-Frank Act 

are Federal consumer financial laws.19

Accordingly, the Bureau has authority 

to issue regulations pursuant to ECOA, 

as well as title X of the Dodd-Frank Act. 

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). Section 

1022(b)(2) of the Dodd-Frank Act 

prescribes certain standards for 

rulemaking that the Bureau must follow 

in exercising its authority under section 

1022(b)(1). 12 U.S.C. 5512(b)(2). 

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. 

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 provide for such 

adjustments and exceptions for any 

class of transactions, that 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). Pursuant to this authority, the 

Bureau proposes to implement the 

amended ECOA appraisal provision. 15 

U.S.C 1691(e). The proposed rule would 

amend existing § 1002.14 of Regulation 

B. 

V. Section-by-Section Analysis 

Section 1002.14 Rules on Providing 

Appraisals and Valuations 

Overview 

This proposal would implement 

amendments made by the Dodd-Frank 

Act to ECOA that require, among other 

things, that creditors provide applicants 

with free copies of any and all written 

appraisals and valuations developed in 

connection with an application for a 

loan to be secured by a first lien on a 

dwelling. The Bureau is proposing to 

implement these new requirements 

through amendments to existing 

§ 1002.14 of Regulation B. 

14(a) Providing Appraisals and 

Valuations 

Currently, § 1002.14(a) of Regulation 

B sets forth the general requirement that 


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50394 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

a creditor shall provide a copy of the 

appraisal report used in connection 

with an application for credit that is to 

be secured by a lien on a dwelling. 

Section 1002.14(a) states that a creditor 

must comply with either § 1002.14(a)(1), 

which provides for routine delivery of 

copies of appraisal reports to an 

applicant, or § 1002.14(a)(2), which sets 

forth rules for providing copies of 

appraisal reports upon request (for 

creditors that do not choose to routinely 

provide appraisal reports to applicants). 

As discussed in more detail below, the 

Bureau is proposing to amend 

§ 1002.14(a) to implement changes to 

the appraisal delivery requirements set 

forth in the Dodd-Frank Act. Because 

the Dodd-Frank Act amendments to 

ECOA section 701(e) eliminate the 

option for a creditor to provide copies 

of appraisals or valuations only upon 

written request, the Bureau is proposing 

to renumber portions of proposed 

§ 1002.14(a) for clarity. 

As discussed in more detail below, 

proposed § 1002.14(a)(1) would set forth 

the general requirement to provide 

copies of written appraisals and 

valuations to applicants for credit to be 

secured by a first lien on a dwelling, 

and would set forth the timing and 

waiver requirements for providing such 

copies. Proposed § 1002.14(a)(2) would 

require that a creditor provide a written 

disclosure of the applicant’s right to 

receive a copy of such written 

appraisals and valuations. Proposed 

§ 1002.14(a)(3) would prohibit creditors 

from charging the applicant for 

providing a copy of written appraisals 

and valuations, but would permit 

creditors to require applicants to pay a 

reasonable fee to reimburse the creditor 

for appraisals and valuations. Proposed 

§ 1002.14(a)(4) would clarify that the 

requirements of § 1002.14(a)(1) apply 

regardless of whether credit is extended 

or denied, or if the application is 

incomplete or withdrawn. Proposed 

§ 1002.14(a)(5) would allow for the 

copies required by § 1002.14(a)(1) to be 

provided in electronic form. As is 

discussed in more detail below, 

proposed § 1002.14(b) would define 

certain terms used in proposed 

§ 1002.14(a). 

Current comment 14(a)(2)(i)–1 

addresses the notice requirements if the 

application subject to § 1002.14 involves 

more than one applicant. The Bureau is 

proposing to renumber current comment 

14(a)(2)(i)–1 as proposed comment 

14(a)–1, and to make a conforming 

change so that the comment accurately 

refers to the disclosure about copies of 

written appraisals and valuations rather 

than to a notice about the appraisal 

report. In addition, the proposed 

comment would be amended to clarify 

that the comment also applies to the 

requirement to provide copies of written 

appraisals and valuations. Accordingly, 

the proposed comment would clarify 

that if there is more than one applicant, 

the notice about the written appraisals 

and valuations, and the copies of 

written appraisals and valuations, need 

only be given to one applicant, but it 

must be given to the primary applicant 

where one is readily apparent. 

14(a)(1) In General 

Scope 

Consistent with ECOA section 

701(e)(1), proposed § 1002.14(a)(1) 

would require a creditor to provide an 

applicant a copy of all written 

appraisals and valuations developed in 

connection with an application for 

credit that is to be secured by a first lien 

on a dwelling. The scope of proposed 

§ 1002.14(a)(1) differs in several 

important respects from current 

§ 1002.14(a). First, consistent with new 

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

amendments to § 1002.14(a)(1) would 

broaden scope of the current 

requirement to provide copies of ‘‘an 

appraisal report’’ to include ‘‘all written 

appraisals and valuations developed.’’ 

Thus, more types of documents 

developed to value properties would be 

covered. 

At the same time, the amendments 

made to ECOA section 701(e)(1) also 

narrow the types of transactions that are 

covered by subsection (e). Specifically, 

the proposed rule would apply to 

applications for credit to be secured by 

a first lien on a dwelling. In contrast, 

current § 1002.14(a) applies to 

applications for credit secured by a first 

lien or a subordinate lien on a dwelling. 

Accordingly, proposed § 1002.14(a)(1) 

would also add the word ‘‘first’’ to 

§ 1002.14(a) to narrow the scope of the 

proposed rule to cover only loans 

secured by a first lien on a dwelling, 

consistent with the Dodd-Frank Act 

amendments to section 701(e) of ECOA. 

Current comments 14(a)–1 and 14(a)– 

2 clarify the applicability of the 

appraisal delivery requirements to 

credit for business purposes and 

renewals. The proposal would generally 

retain comments 14(a)–1 and 14(a)–2 

(renumbered as comments 14(a)(1)–1 

and 14(a)(1)–2), with several conforming 

and technical changes. Specifically, 

proposed comment 14(a)(1)–1 would 

include an updated cross-reference to 

the definition of ‘‘dwelling’’ that, as 

discussed below, is proposed to be 

moved to § 1002.14(b)(2). In addition, 

proposed comment 14(a)(1)–1 would be 

narrowed to cover only loans secured by 

a first lien on a dwelling, consistent 

with proposed § 1002.14(a)(1). Thus, 

proposed comment 14(a)(1)–1 would 

provide that § 1002.14(a)(1) 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 business credit (see 

§ 1002.2(g)) or consumer credit (see 

§ 1002.2(h)). 

Proposed comment 14(a)(1)–2 would 

generally be consistent with current 

comment 14(a)–2. However, proposed 

comment 14(a)(1)–2 would use the 

statutory term ‘‘developed’’ provided in 

new ECOA section 701(e)(1) in place of 

the term ‘‘obtained’’ throughout the 

comment. Thus, proposed comment 

14(a)(1)–2 would provide that 

§ 1002.14(a)(1) applies when an 

applicant requests the renewal of an 

existing extension of credit and the 

creditor develops a new written 

appraisal or valuation. In addition, the 

proposed comment would also provide 

that § 1002.14(a) does not apply when a 

creditor uses the appraisals or 

valuations that were previously 

developed in connection with the prior 

extension of credit in order to evaluate 

the renewal request. 

The Bureau requests comment on 

whether additional guidance is needed 

on the application of the requirements 

of proposed § 1002.14(a)(1) in the case 

of renewals for consumer or business 

purpose transactions. 

The Bureau is proposing to adopt a 

new comment 14(a)(1)-3 that would 

clarify that for purposes of § 1002.14, a 

‘‘written’’ appraisal or valuation 

includes, without limitation, an 

appraisal or valuation received or 

developed by the creditor: in paper form 

(hard copy); electronically, such as by 

CD or email; or by any other similar 

media. In addition, the proposed 

comment clarifies that creditors should 

look to § 1002.14(a)(5) regarding the 

provision of copies of appraisals and 

valuations to applicants via electronic 

means. The Bureau believes that its 

proposed interpretation of the term 

‘‘written’’ best serves the purposes of 

the statute, because consumers would 

receive free copies of appraisals and 

valuations regardless of whether the 

creditor receives, prepares or stores 

these materials in paper or electronic 

form. 

Timing 

Proposed § 1002.14(a)(1) would 

clarify that a creditor must provide a 

copy of each written appraisal or 

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 


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20See 12 CFR 701.31(c)(5) providing that 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. 

21The legislative history to the 1991 ECOA 

amendments cited to in the Board’s 1993 Final Rule 

on Providing Appraisals notes that the NCUA 

already requires credit unions to make appraisals 

available, and that the legislation is not intended to 

modify those NCUA regulations. See S. Rep. No. 

102–167, at 90 (102nd Cong. 1st Sess. 1991). 

consummation of the transaction, 

whichever is first to occur. This aspect 

of the proposal implements ECOA 

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

creditors provide the copies of each 

written appraisal or valuation promptly, 

but in no case later than three days prior 

to the closing of the loan. The statute 

does not define the term ‘‘promptly.’’ 

However, current § 1002.14(a)(2)(ii) 

states that ‘‘promptly’’ means generally 

within 30 days. For consistency with 

existing § 1002.14(a)(2)(ii), under 

proposed § 1002.14(a)(1) the provision 

of a copy of written appraisals and 

valuations will generally be considered 

prompt if the written appraisals and 

valuations are provided within 30 days 

of receipt thereof by the creditor. Thus, 

under the proposed rule a creditor 

would be required to provide a copy of 

all appraisals and valuations within 30 

days of receipt or three days prior to 

consummation of the transaction, 

whichever is first to occur. 

In addition, for clarity and to be 

consistent with other similar regulatory 

requirements under TILA and RESPA, 

the proposed rule would use the term 

‘‘consummation’’ in place of the 

statutory term ‘‘closing’’ and clarify that 

the statutory term ‘‘days’’ means 

‘‘business days.’’ 

Waiver 

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 in law. The Bureau believes 

that the ‘‘3 day requirement’’ referenced 

in the statute refers to the timing 

requirement to provide a copy of an 

appraisal or valuation three business 

days prior to closing, as opposed to the 

general requirement to provide copies of 

all appraisals and valuations. 

Specifically, the Bureau believes that a 

creditor is required to provide a copy of 

an appraisal or valuation developed 

promptly (generally within 30 days) 

even if the application is denied, 

incomplete, withdrawn, or the applicant 

waives the three day requirement. In 

addition, because creditors who order or 

conduct an appraisal or valuation 

require it to be completed before 

consummation of the transaction, the 

Bureau believes that a creditor should 

always be required to provide an 

applicant a copy of written appraisals 

and valuations by the date of 

consummation of the transaction. 

Accordingly, proposed § 1002.14(a)(1) 

provides that, notwithstanding the other 

requirements in § 1002.14(a)(1), an 

applicant may waive the timing 

requirement to receive a copy of an 

appraisal or valuation three business 

days prior to consummation and agree 

to receive the copy at or before 

consummation, except as otherwise 

prohibited by law. 

Proposed comment 14(a)(1)–4 would 

clarify that § 1002.14(a)(1) permits the 

applicant to waive the timing 

requirement that written appraisals and 

valuations be provided no later than 

three business days prior to 

consummation if the creditor provides 

the copy at or before consummation, 

except as otherwise provided by law. In 

addition, the proposed comment would 

provide that an applicant’s waiver is 

effective under § 1002.14(a)(1) if the 

applicant provides the creditor an 

affirmative oral or written statement 

waiving the 3-day timing requirement. 

Finally, the proposed comment would 

provide that if there is more than one 

applicant for credit in the transaction, 

any applicant may provide the 

statement. 

Delivery Upon Request No Longer 

Permitted 

Section 1474 of the Dodd-Frank Act 

amended ECOA section 701(e) to 

mandate that copies of appraisals and 

valuations be provided regardless of 

whether the consumer affirmatively 

requests such copies. Accordingly, for 

consistency with the statute, the Bureau 

is proposing to delete current 

§ 1002.14(a)(1) and (a)(2), which permit 

creditors to choose between the ‘‘routine 

delivery’’ and ‘‘delivery upon request’’ 

methods of complying with the 

requirements of § 1002.14. 

Exemption for Credit Unions Removed 

The Board’s 1993 Final Rule on 

Providing Appraisal Reports (1993 Final 

Rule) provided an exemption from the 

appraisal delivery requirements in 

§ 1002.14 for credit unions. See 58 FR 

65657, 65660 (Dec. 16, 1993). In the 

1993 Final Rule the Board cited to the 

legislative history of the 1991 ECOA 

amendments as the basis for the 

exemption for credit unions. The 

reasoning behind this exemption 

appears to have been that credit unions 

were already required to comply with 

substantially similar requirements 

under the regulations of the National 

Credit Union Administration (NCUA).20

The Board also cited to a section of the 

legislative history noting that Congress 

intended no change to the NCUA’s 

regulations in adding the requirement to 

provide appraisals in ECOA.21

Under 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, the Dodd-Frank Act 

amendments to ECOA section 701(e) 

substantially alter the requirements on 

creditors to provide appraisals. 

Specifically, section 1474 of the DoddFrank Act expanded the scope of the 

requirements of ECOA section 701(e) to 

require creditors to provide copies of all 

valuations, and to eliminate the need for 

applicants to request copies. In 

addition, neither section 1474 of the 

Dodd-Frank Act nor the 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, as proposed, 

§ 1002.14 would delete the exemption 

for credit unions in current § 1002.14(b). 

The Bureau requests comment on the 

removal of this exemption and whether 

there are additional factors the Bureau 

should take into consideration relating 

to the application of proposed § 1002.14 

to credit unions. 

14(a)(2) Disclosure 

Consistent with ECOA section 

701(e)(5), proposed § 1002.14(a)(2) 

provides that for applications subject to 

§ 1002.14(a)(1), a creditor shall provide 

an applicant with a written disclosure, 

not later than the third business day 

after the creditor receives an 

application, of the applicant’s right to 

receive a copy of all written appraisals 

and 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 proposed rule 

provides: ‘‘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 provides: 


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22See, e.g., 2012 TILA–RESPA Proposal, at 12 

CFR 1026.19(e)(1)(iii) (‘‘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.’’) available at http:// 

www.consumerfinance.gov/regulations/. 23See, e.g., 12 CFR 1026.19(a)(1)(i) providing in 

relevant part that 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 § 226.18 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. 

24 2012 TILA–RESPA Proposal, at 12 CFR 

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

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

25See 2012 TILA–RESPA Proposal, available at 

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

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 others 

(i.e., an ECOA disclosure for first-lien, 

dwelling-secured loans that are not higherrisk mortgage loans, or a TILA disclosure for 

higher-risk mortgage loans secured by a 

subordinate lien). 

The Bureau believes that Congress 

intended the ECOA and TILA 

disclosures to work together to provide 

consumers a better understanding of 

their rights in the appraisal process. 

Accordingly, the Bureau is proposing to 

exercise its authority under section 

703(a) of ECOA and section 1405(b) of 

the Dodd-Frank Act to amend form C– 

9 in Regulation B to include the 

language developed to satisfy the new 

appraisal-related disclosure 

requirements of both ECOA and TILA. 

The proposed sample disclosure 

language differs from the express 

statutory language provided in section 

701(e)(5). However, based on the results 

of the testing described above, the 

Bureau believes that the additional 

explanatory text is necessary to promote 

consumer comprehension and to reduce 

any confusion associated with the TILA 

appraisal notification that will also have 

to be given to applicants for higher-risk 

mortgage loans. The Bureau believes 

this approach will also reduce 

compliance burden for industry by 

allowing a single disclosure to satisfy 

both statutory requirements. 

Accordingly, the Bureau believes that 

the proposed sample notice language 

developed to satisfy the disclosure 

requirements of both TILA and ECOA 

serves the interests of consumers, the 

public, and creditors. The Bureau 

requests comment on the proposed 

language and whether additional 

changes should be made to the text of 

the notification to further enhance 

consumer comprehension. 

In addition, the Bureau notes that the 

model language in proposed Form C–9 

refers only to appraisals, while 

proposed § 1002.14(a)(2) refers to ‘‘all 

written appraisals and valuations.’’ The 

Bureau solicits comment on what, if 

any, adjustments or clarifications to 

Form C–9 would be appropriate for 

creditors that perform valuations rather 

than, or in addition to, appraisals. 

Timing and Method of Delivery 

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 written appraisal 

and valuation. The Bureau proposes to 

interpret the phrase ‘‘at the time of 

application’’ to require creditors to 

provide the ECOA appraisal disclosure 

no later than three business days after 

receiving an application. Proposed 

§ 1002.14(a)(2) would require 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 written 

appraisals and valuations developed in 

connection with such application. 

This approach is consistent with the 

disclosure requirements of TILA and 

RESPA.22 Currently, creditors are 

required to provide disclosures under 

TILA and RESPA no later than the third 

business day after receiving a 

consumer’s written application.23 The 

Bureau has also proposed as part of the 

2012 TILA–RESPA Proposal that the 

ECOA disclosure be provided as part of 

the Loan Estimate disclosure to be 

delivered not later than the third 

business day after application, to 

eliminate the need for a separate 

disclosure.24

The Bureau believes this approach is 

warranted because providing the 

disclosure to applicants at the same 

time as other similar disclosures—and 

possibly 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. 

The Bureau requests comment on 

whether providing the disclosure at 

some other time would be more 

beneficial to consumers, and how the 

disclosure should be provided where an 

application is submitted by phone, fax 

or electronically. For example, the 

Bureau solicits comment on whether it 

would be appropriate to require that 

creditors provide the disclosure at the 

same time the application is received, or 

even as part of the application. 

The Bureau also seeks comment on 

the effective date if the Bureau were to 

finalize the proposal to include the new 

appraisal disclosure in the TILA–RESPA 

Loan Estimate. Because the 2012 TILA– 

RESPA Proposal likely will not be 

finalized on the same timeline as this 

proposal, creditors would likely have to 

revise their current ECOA disclosures to 

reflect the new language and distribute 

the disclosures as standalone forms 

until such time as the TILA–RESPA 

integrated disclosures must be provided. 

The Bureau believes that the burden 

involved would be modest since the 

forms are currently typically provided 

as standalone documents and do not 

require complicated dynamic systems 

programming to generate. The Bureau 

believes it is important for consumers to 

begin receiving information about their 

rights under ECOA with respect to 

receiving copies of appraisals. The 

Bureau therefore is not proposing to 

delay implementation of the disclosure 

requirement, as it is with some other 

mortgage-related disclosures required by 

the Dodd-Frank Act that the Bureau is 

proposing to implement as part of the 

integrated TILA–RESPA forms.25 The 

Bureau seeks comment on the burden 

and time involved in implementing the 

proposed revisions to the ECOA notice. 

14(a)(3) Reimbursement 

Consistent with ECOA sections 

701(e)(3) and 701(e)(4), the proposed 

rule would remove current comment 

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

charge photocopy and postage costs 

incurred in providing a copy to the 

applicant. ECOA sections 701(e)(3) and 

701(e)(4) address creditors’ ability to 

charge certain fees relating to appraisals 

and valuations. 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 that 

notwithstanding this ability, however, 

creditors shall provide a copy of each 

written appraisal or valuation at no 

additional cost to the applicant. 

The Bureau interprets the two 

provisions to permit creditors to charge 


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26According 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 

Residential Appraisals: Opportunities to Enhance 

Oversight of an Evolving Industry GAO–11–653, pg. 

22 (July 2011). Other forms of valuation, however, 

tend to cost less than appraisals. Broker Price 

Opinions typically cost $65–125; valuations derived 

from an automated valuation model typically cost 

$5–25. See Id., pgs. 17–18; see also Real Estate 

Appraisals: Appraisal Subcommittee Needs to 

Improve Monitoring Procedures–12–147, pg. 39 

(Jan. 2012). 

27See, 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. 

applicants reasonable fees to reimburse 

the creditor for costs of the appraisal or 

valuation itself, but not for 

photocopying, postage, or similar costs 

associated with providing one written 

copy to the applicant. Accordingly, 

proposed § 1002.14(a)(3) generally 

implements sections 701(e)(3) and 

701(e)(4), and provides additional 

details for clarity. 

In addition, the proposed regulation 

affirms that creditors may impose fees to 

reimburse the costs of both valuations 

and appraisals. Although ECOA section 

701(e)(3) does not expressly refer to 

valuations, the reference to both 

appraisals and valuations in 701(e)(4) 

regarding the provision of copies creates 

ambiguity as to congressional intent. 

The Bureau believes 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 valuations, such as 

broker-price opinions or automated 

valuation models. The Bureau does 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 equally appropriate in particular 

circumstances.26 Such a result would 

impose needless costs on loan 

applicants. 

To the extent necessary, the Bureau 

relies on the authority provided in 

ECOA section 703(a) to provide 

adjustments and exceptions for any 

class of transactions in proposing 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 valuation, except as 

otherwise provided by law. Such an 

adjustment effectuates the purposes of 

ECOA by permitting creditors to charge 

applicants for less costly forms of 

valuations that may be utilized in 

certain low dollar value transactions, 

and then pass those savings on to loan 

applicants. For example, the Federal 

banking agencies 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.27

Proposed comment 14(a)(3)–1 would 

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 

written appraisals or valuations. 

Proposed comment 14(a)(3)–2 would 

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 valuation services, so long 

they are not increased to cover the costs 

of providing documentation under 

§ 1002.14. The Bureau does not read 

ECOA section 701(e)(3) as an attempt to 

create a proscriptive rate regime for all 

valuation-related activities. The Bureau 

notes that where Congress believed 

direct regulation of the amount of fees 

in connection with appraisal activities 

was required, it specified standards in 

the Dodd-Frank Act. See Dodd-Frank 

Act section 1472 (requiring under TILA, 

with regard to residential mortgage 

loans, that creditors and their agents pay 

independent appraisers fees that are 

‘‘reasonable and customary’’ for the 

market area where the property is 

located, and specifying various sources 

for determining whether fees meet the 

standard). The Bureau does not believe 

that Congress intended ECOA section 

701, which focuses on the provision of 

documentation to loan applicants rather 

than the substantive performance of 

appraisal and valuation services, to 

function in such a manner. Accordingly, 

the Bureau believes that sections 

701(e)(3) and 701(e)(4) are simply 

designed to prevent direct or indirect 

upcharging related to the 

documentation provision that is the 

focus of the statute. 

To further clarify the statutory 

language stating that creditors’ ability to 

seek reimbursement for the cost of the 

appraisal does not apply ‘‘where 

otherwise required in law,’’ proposed 

comment 14(a)(3)–2 also notes that 

other sources of law 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 DoddFrank Act requires creditors to obtain a 

second interior appraisal in connection 

with certain higher-risk mortgage loans, 

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 requests comment on the 

proposed text and whether additional 

guidance is needed to comply with the 

requirements of proposed 

§ 1002.14(a)(3). 

14(a)(4) Withdrawn, Denied or 

Incomplete Applications 

Consistent with ECOA section 

701(e)(1), proposed § 1002.14(a)(4) 

would provide that the requirements of 

§ 1002.14(a)(1) apply whether credit is 

extended or denied or if the application 

is incomplete or withdrawn. This 

language would expand on the language 

in current § 1002.14(a)(1), which already 

requires that creditors using the routine 

delivery option of compliance provide 

copies of appraisal reports ‘‘whether 

credit is granted or denied or the 

application is withdrawn.’’ Specifically, 

under the proposed rule creditors would 

also be required to provide copies of 

appraisals and valuations in situations 

where an applicant provides only an 

incomplete application. 

14(a)(5) Copies in Electronic Form 

Section 1002.4(d)(2) of Regulation B 

currently provides that the disclosures 

required to be provided in writing by 

this part 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.). The Bureau 

believes that it is appropriate to allow 

creditors to provide applicants with 

copies of written appraisals and 

valuations in electronic form if the 

applicant consents to receiving the 

copies in such form. Accordingly, 

proposed § 1002.14(a)(5) would provide 

that the copies of written appraisals and 

valuations 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 E-Sign Act. 

14(b) Definitions 

Proposed § 1002.14(b) would set forth 

three definitions, discussed below. The 

Bureau requests 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). 


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28Specifically, 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. 

14(b)(1) Consummation 

As discussed above, for clarity and to 

be consistent with other similar 

regulatory requirements under TILA and 

RESPA, proposed § 1002.14(a)(1) would 

use the term ‘‘consummation’’ in place 

of the statutory term ‘‘closing.’’ In 

addition, the proposed rule would 

define the term ‘‘consummation’’ in a 

manner that mirrors the definition of the 

term provided in § 1026.2(a)(13) of 

Regulation Z. 12 CFR 1026.2(a)(13). 

Accordingly, proposed § 1002.14(b)(1) 

would define the term ‘‘consummation’’ 

as the time that a consumer becomes 

contractually obligated on a credit 

transaction. 

Proposed comment 14(b)(1)–1 would 

clarify that 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. 

Proposed comment 14(b)(1)–2 would 

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. 

14(b)(2) Dwelling 

Proposed § 1002-1.14(b)(2) would 

retain the definition of the term 

‘‘dwelling’’ in current § 1002.14(c). 

Specifically, proposed § 1002.14(b)(2) 

would define the term ‘‘dwelling’’ as a 

residential structure that contains one to 

four units whether or not that structure 

is attached to real property. Proposed 

paragraph (b)(2) further provides that 

the term ‘‘dwelling’’ includes, but is not 

limited to, an individual condominium 

or cooperative unit, and a mobile or 

other manufactured home. 

14(b)(3) Valuation 

Consistent with ECOA section 

701(e)(6), proposed § 1002.14(b)(3) 

defines ‘‘valuation’’ as any estimate of 

the value of a dwelling developed in 

connection with a creditor’s decision to 

provide credit. The commentary to the 

proposed rule would include the list of 

examples provided in ECOA section 

701(e)(6). 

Proposed comment 14(b)(3)–1 would 

amend current comment 14(c)–1 to 

provide the following examples of 

valuations: 

• 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 person’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). 

• Values 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. 

• Values 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 Bureau requests comment on 

whether this list should include other 

examples of valuations. In addition, the 

Bureau requests comments on whether 

additional clarification is needed about 

what types of information would not 

constitute a valuation for purposes of 

§ 1002.14. 

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 a 

written appraisal or valuation. The 

Bureau does not believe that consumers 

would benefit from being given 

duplicative information concerning 

written appraisals and valuations. 

Additionally, it is important for 

creditors to be able to easily distinguish 

between documents that must be 

provided to applicants and those that 

are not required to be provided. 

Accordingly, proposed comment 

14(b)(3)–2 would amend current 

comment 14(c)–2 to clarify that not all 

documents that discuss or restate a 

valuation of an applicant’s property 

constitute ‘‘written appraisals and 

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

In addition, the proposed comment 

would provide the following list of 

examples of documents that discuss the 

valuation of the applicant’s property but 

nonetheless are not ‘‘written appraisals 

and valuations:’’ 

• Internal documents, that merely 

restate the estimated value of the 

dwelling contained in a written 

appraisal or valuation being provided to 

the applicant. 

• Governmental agency statements of 

appraised value that are publically 

available. 

• 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. 

The Bureau requests comment on 

whether this list of examples is too 

broad or whether additional examples 

should be included and why. 

V. Section 1022(b)(2) of the Dodd-Frank 

Act 

In developing the proposed rule, the 

Bureau has considered potential 

benefits, costs, and impacts to 

consumers and covered persons,28 and 

has consulted or offered to consult with 

the Federal banking agencies, FHFA, the 

Department of Housing and Urban 

Development, and the Federal Trade 

Commission, including regarding 

consistency with any prudential, 

market, or systemic objectives 

administered by such agencies. 

The proposed rule would amend 

Regulation B, which implements the 

Equal Credit Opportunity Act, and the 

official interpretation to the regulation, 

which interprets the requirements of 

Regulation B. The proposed revisions to 

Regulation B would implement an Equal 

Credit Opportunity Act amendment 

concerning appraisals and other 

valuations that was enacted as part of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. In general, the 

proposed revisions to Regulation B 

would require creditors to provide free 

copies of all written appraisals and 

valuations developed in connection 

with an application for a loan to be 

secured by a first lien on a dwelling. 

The proposal also would require 

creditors to notify applicants in writing 

of the right to receive a copy of each 

written appraisal or valuation at no 

additional cost. 


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29The 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 more fully inform the 

rulemaking. 

30The 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 

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. Depository institutions (including 

credit unions) with assets less than $39 million (in 

2010), for example, and those with branches 

exclusively in non-metropolitan areas and those 

that make no purchase money mortgage loans are 

not required to report to HMDA. Reporting 

requirements for non-depository institutions 

depend on several factors, including whether the 

company made fewer than 100 purchase money or 

refinance 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, Neil Bhutta, Kenneth P. 

Brevoort & Glenn B. Canner, The Mortgage Market 

in 2010: Highlights from the Data Reported under 

the Home Mortgage Disclosure Act, 97 Fed. Res. 

Bull., December 2011, at 1, 1 n.2. 

31Every 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/. 

32The Nationwide Mortgage Licensing System is 

a national registry of non-depository 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. 

33The value of the information may vary 

depending on when in the home purchase and loan 

origination process he or she receives the 

information. 

34 John Beshears, James Choi, David Laibson, & 

Brigitte Madrian. ‘‘The Importance of Default 

Options for Retirement Savings Outcomes: 

Evidence from the United States.’’ Chap. 5 In Social 

Security Policy in a Changing Environment, Jeffrey 

Brown, Jeffrey Liebman & David A. Wise eds. 

(Chicago, IL: University of Chicago Press), 169–195. 

Eric Johnson and Daniel Goldstein. ‘‘Do Defaults 

Save Lives?’’ Science 302 (2003) 1338–1139. 

35Steven Levitt and Chad Syverson. ‘‘Market 

Distortions When Agents are Better Informed: The 

Value of Information In Real Estate Transactions.’’ 

The Review of Economics and Statistics 90 no.4 

(2008): 599–611. 

36Peter Scott and Colin Lizieri. ‘‘Consumer House 

Price Judgments: New Evidence of Anchoring and 

Arbitrary Coherence.’’ Journal of Property Research 

29 no. 1 (2012): 49–68. 

37For 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 and John Quigley. ‘‘Price Formation 

and the Appraisal Function in Real Estate Markets.’’ 

Journal of Real Estate Finance and Economics 4 

(1991): 127–146. 

Section 1022 permits the Bureau to 

consider the benefits, costs, and impacts 

of the proposed rule 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 proposed 

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).29

The Bureau has relied on a variety of 

data sources to analyze the potential 

benefits, costs, and impacts of the 

proposed rule. However, in some 

instances, the requisite data are not 

available or quite limited. Data with 

which to quantify the benefits of the 

proposed rule are particularly limited. 

As a result, portions of this analysis 

provide a qualitative discussion of the 

benefits, costs, and impacts of the 

proposed rule, relying instead in part on 

general economic principles to provide 

insight into these benefits, costs, and 

impacts. 

The primary source of data used in 

this analysis comes from data collected 

under the Home Mortgage Disclosure 

Act (HMDA).30 Because the latest wave 

of complete data available is for loans 

made in calendar year 2010, the 

empirical analysis generally uses the 

2010 market as the baseline. Data from 

fourth quarter 2010 bank and thrift Call 

Reports,31 fourth quarter 2010 credit 

union call reports from the National 

Credit Union Administration (NCUA), 

and de-identified data from the National 

Mortgage Licensing System (NMLS) 

Mortgage Call Reports (MCR) 32 for the 

first and second 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. The Bureau seeks comment 

on the use of these data sources, the 

appropriateness to this purpose, and 

alternative or additional sources of 

information. 

Potential Benefits and Costs to Covered 

Persons and Consumers 

Consumers. Since the proposed rule 

requires creditors to deliver copies of 

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 proposed rule. The 

provision of the free copy of the 

valuation provides consumers with 

details about the valuation and the 

condition of the property. Although 

most consumers receive much of this 

information from a home inspection and 

although the appraisal is done for the 

creditor, each valuation provides the 

consumer with another independent 

evaluation. This detailed information 

may be particularly valuable to the 

consumer when the appraised value is 

less than the buyer’s offer.33

The proposed rule would change the 

process of obtaining a copy from one 

where the consumer must request one to 

one where the copy is given as the 

default. This would likely result in more 

consumers obtaining copies of their 

valuations since, despite low 

transaction costs, there is evidence that 

default rules can have significant effects 

on outcomes in various settings.34

Consumers who previously may have 

requested copies of valuations in the 

absence of the amendment save the time 

and effort required to make requests. 

Individual consumers engage in real 

estate transactions infrequently, so 

developing the expertise to value real 

estate is costly and consumers often rely 

on experts, such as 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 houses, which suggests 

that sellers may not be able to accurately 

price the homes that they are selling.35

Other research, this time in a laboratory 

setting, provides evidence that 

individuals are sensitive to anchor 

values when estimating home prices.36

In such cases, an independent signal of 

the value of the home should benefit the 

consumer. Having a professional 

valuation as a point of reference may 

help consumers gain a more accurate 

understanding of the home’s value and 

improve overall market efficiency, 

relative to the case where the knowledge 

of true valuations is more limited.37

Covered Persons. In the context of the 

proposed rule, ‘‘covered persons’’ 

includes depository institutions such as 

banks, credit unions, and thrifts, as well 

as non-depository lenders such as 

independent mortgage banks. The 

Bureau estimates that of the roughly 

15,000 depository institutions, just 

fewer than 12,000 originate mortgage 

loans. Another 2,500 non-depository 

institutions engage in real estate credit, 

based on data from the NMLS MCR. The 


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38Respondents include a large bank, a trade 

group of smaller depository institutions, and an 

independent mortgage bank. 

39Based on its 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. The Bureau assumes that 84% of 

appraisals are sent via email, 15.75% of appraisals 

are sent via the United States Postal Service, and 

0.25% of appraisals are sent via courier. 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; 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. 

40Specifically, Poisson regressions are run 

projecting loan volumes in these categories on the 

natural log of the following characteristics available 

in the Call reports: total 1–4 family residential loan 

volume outstanding, full-time equivalent 

employees, and assets. The regressions are run 

separately for each category of depository 

institution. 

41The 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 at each 

firm, and by one compliance officer at each nondepository institution, two compliance officers at 

each depository institution over $10 billion in 

assets, and one half a compliance officer at each 

smaller DI. 

42Approximately 50 banks with under $10 billion 

in assets are affiliates of large banks with over $10 

billion in assets and subject to Bureau supervisory 

authority under Section 1025. However, these banks 

are included in this discussion for convenience. 

43For purposes of assessing the impacts of the 

proposed 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). 

proposed 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 calls to industry, 

all respondents reported providing 

copies of appraisals to borrowers as a 

matter of course if a loan is originated.38

In addition, the proposed rule requires 

that copies of appraisals and valuations 

be sent in the event that an application 

is received but does not result in a loan 

being originated. Note that while the 

proposed rule prohibits creditors from 

charging consumers for these copies, the 

cost of compliance is offset in part by 

the costs saved by no longer having to 

respond to consumer requests for 

copies. Because responding to a request 

involves querying a loan file, finding the 

appraisal, and then going through the 

process of sending copies of valuations 

to the consumer, the cost of responding 

to a single consumer request may be 

higher than the cost of routinely 

providing a copy of valuations for a 

given loan. 

Under the proposed 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 

valuations.39 Based on outreach to 

industry the Bureau assumes that 

appraisals and copies of other 

valuations are currently sent to 

consumers for 100% of first lien 

transactions that result in an origination 

and that copies of appraisals and 

valuations conducted for applications 

that do not result in a loan are not sent 

to consumers. As a result, the 

paperwork costs result from those 

applications that do not result in 

originations. 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% of the time, 

necessitating a second appraisal. 

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.40 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 proposed 

rule and in training the relevant 

employees.41 To estimate these costs, 

the number of loan officers who may 

require training is estimated based on 

the application or origination estimates. 

The total costs from the proposed rule 

are approximately $14 million or just 

under $1.70 for each loan originated. 

The bulk of these costs arise from the 

paperwork requirements; roughly ten 

percent results from the one-time review 

and training costs. 

Potential Reduction in Access by 

Consumers to Consumer Financial 

Products or Services 

Since the proposed rule, which 

largely codifies existing practice, is 

limited to relatively low cost clerical 

tasks and does not require the creditor 

to obtain any additional goods or 

services, the proposed rule is not likely 

to have an appreciable impact on the 

cost of credit for consumers or on loan 

volumes. 

Impact of the Proposed Rule on 

Depository Institutions and Credit 

Unions With $10 Billion or Less in Total 

Assets, As Described in Section 1026 42

and the Impact of the Proposed Rule on 

Consumers in Rural Areas 

For smaller depository institutions, 

those with total assets of $10 billion or 

less, the proposed rule is estimated to 

cost $4.6 million. Because of their 

smaller size, fixed training and 

reviewing costs are spread over fewer 

applications and originations and as a 

result, the average cost would increase 

slightly; for each loan these institutions 

originate, the cost is estimated to be 

roughly $1.80. 

The Bureau does not anticipate that 

the proposed rule would have a unique 

impact on consumers in rural areas. 

Additional Analysis Being Considered 

and Request for Information 

In addition to the comment solicited 

elsewhere in this proposed rule, the 

Bureau requests commenters to submit 

data and to provide suggestions for 

additional data to assess the issues 

discussed above and other potential 

benefits, costs, and impacts of the 

proposed rule. The Bureau also requests 

comment on the use of the data 

described above. Further, the Bureau 

seeks information or data on the 

proposed rule’s potential impact on 

consumers in rural areas as compared to 

consumers in urban areas. The Bureau 

also seeks information or data on the 

potential impact of the proposed rule on 

depository institutions and credit 

unions with total assets of $10 billion or 

less as described in Dodd-Frank Act 

section 1026 as compared to depository 

institutions and credit unions with 

assets that exceed this threshold and 

their affiliates. 

VI. 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.43 The Bureau 

also is subject to certain additional 

procedures under the RFA involving the 


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44 5 U.S.C. 609. 45 13 CFR Ch. 1. 

46All 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: Loan officer wages 

are assumed to $30.66 per hour, lawyer wages are 

$76.99 per hour, and compliance officer wages are 

$29.48 per hour. These rates are then increased to 

reflect that wages represent 67.5% of an employee’s 

total compensation. 

convening of a panel to consult with 

small business representatives prior to 

proposing a rule for which an IRFA is 

required.44 An IRFA is not required for 

this proposal because the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. 

The proposed rule would amend 

Regulation B, which implements the 

Equal Credit Opportunity Act, and the 

official interpretation to the regulation, 

which interprets the requirements of 

Regulation B. The proposed revisions to 

Regulation B would implement an Equal 

Credit Opportunity Act amendment 

concerning appraisals and other 

valuations that was enacted as part of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. In general, the 

proposed revisions to Regulation B 

would require creditors to provide free 

copies of all written appraisals and 

valuations developed in connection 

with an application for a loan to be 

secured by a first lien on a dwelling. 

The proposal also would require 

creditors to notify applicants in writing 

of the right to receive a copy of each 

written appraisal or valuation at no 

additional cost. 

The empirical approach to calculating 

the impact the proposed regulation has 

on small entities subject to its 

requirements utilizes the same data and 

methodology outlined in the previous 

section. The analysis that follows 

focuses on the economic impact of the 

proposed rule, relative to a pre-statute 

baseline, for small depository 

institutions, credit unions and nondepository independent mortgage banks 

(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.45 All institutions 

that extend real estate credit secured by 

a first lien on a dwelling are affected by 

the proposed rule. As shown below, the 

vast majority of small banks, thrifts, 

credit unions, and independent 

mortgage banks originate such loans. 

Of the roughly 17,747 depository 

institutions, credit unions, and IMBs, 

13,106 are below the relevant small 

entity thresholds. Of these, 9,807 are 

estimated to have originated mortgage 

loans in 2010. The Bureau has loan 

counts for credit unions and HMDAreporting DIs and IMBs. For IMBs, the 

Bureau only has data on revenues for 

560 of 2515 institutions. In order to 

estimate the number of these 

institutions that have less than $7 

million in revenues the Bureau uses an 

accepted statistical techniques (‘‘nearest 

neighbor matching’’) to impute revenues 

from the MCR. 

TABLE 1—COUNTS AND ORIGINATIONS OF CREDITORS BY TYPE

Category NAICS 

Code 

Total 

entities Small entity threshold Small entities 

Entities that 

originate any 

mortgage 

loans c

Small entities 

that originate 

any mortgage 

loans c

Commercial Banking a .............. 522110 6596 $175 million in assets ............... 3764 6362 3597 

Savings Institutions a ................. 522120 1145 $175 million in assets ............... 491 1138 487 

Credit Unions b .......................... 522130 7491 $175 million in assets ............... 6569 4359 3441 

Independent Mortgage 

Banks d,e.

522292 2515 $7 million in revenues .............. 2282 2515 2282 

Total ................................... .................... 17,747 ................................................... 13106 14374 9807 

aAsset size obtained from December 2010 Call Report Data downloaded from SNL. The institutions in the category savings institutions are all 

thrifts. bAsset size obtained from December 2010 NCUA Call Reports. 

cFor HMDA reporters, loan counts from HMDA 2010. For institutions that do not report to HMDA, loan counts projected based on call report 

data fields and counts for HMDA reporters. d NMLS Mortgage Call Report (MCR) for Q1 and Q2 of 2011. All MCR reporters who originate at least one loan or have positive loan amounts 

are considered to be engaged in real estate credit (instead of purely mortgage brokers). e Revenues were not missing for 560 of the 2515 institutions. For institutions with missing revenue data, values were imputed using nearest 

neighbor matching of the count of originations and the count of brokered loans. 

Although most depository 

institutions, credit unions, and IMBs are 

affected by the proposed rule, the 

burden estimates below show that the 

proposed 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 valuations and the 

costs of reviewing the rule and training 

employees. 

Consistent with the assumptions in 

the analysis of the previous section, the 

Bureau believes, based on its outreach, 

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 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% of the time, necessitating a second 

appraisal.46

Under these assumptions, the total 

costs for small depository institutions 

and credit unions of providing copies of 

the appraisals or valuations and any 

one-time costs for reviewing the 

regulation and training employees are 

estimated to be roughly $2.70 per loan 

originated. For small IMBs, the costs are 

estimated to be just under $2.00 per 

loan originated. In both cases, the higher 

average costs reflect the greater 

importance of the fixed costs of training 

for smaller institutions as one-time costs 

are spread over fewer mortgage 

originations at these entities. 

Nevertheless, across all small entities, 

the costs of the rule amount to a small 


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50402 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

47 Industry experts estimate that gross revenues 

per loan are approximately 3% 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. 

48Outreach conversations included a large bank, 

a trade group of smaller depository institutions, and 

an independent mortgage bank. 

49There may be a small additional burden for 

privately insured credit unions estimated to 

originate mortgages. The Bureau will assume half of 

the burden these institutions. 

faction of a percent of the revenue or 

profits from origination activity.47

Certification 

Accordingly, the undersigned certifies 

that this proposal, if adopted, would not 

have a significant economic impact on 

a substantial number of small entities. 

The Bureau requests comment on the 

analysis above and requests any relevant 

data. 

VII. Paperwork Reduction Act 

A. Overview 

The Bureau’s information collection 

requirements contained in this proposed 

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). Under the PRA, the Bureau may 

not conduct or sponsor, and a person is 

not required to respond to, an 

information collection unless the 

information collection displays a valid 

OMB control number. 

The title of this information collection 

is ECOA Appraisal Proposal. The 

frequency of response is on-occasion. 

The proposed rule would amend 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 1002). As 

described below, the proposed rule 

would amend the collections of 

information currently in Regulation B. 

The information collection in the 

proposed rule would be required to 

provide benefits for consumers and 

would be mandatory. Because the 

Bureau does not collect any information 

under the proposed 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 proposed rule, the Bureau 

generally would account 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 non-depository 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 its 

estimated burden to non-depository 

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, but 

are not required to, use the Bureau’s 

burden estimation methodology. 

Using the Bureau’s burden estimation 

methodology, the total estimated burden 

for the roughly 14,000 creditors subject 

to the proposed rule, including Bureau 

respondents, would be approximately 

173,000 hours of ongoing burden 

annually and 20,000 hours in one-time 

burden. Since creditors already provide 

consumers copies of appraisals if a loan 

closes, the Bureau assumes that there 

are no required software or information 

technology upgrades associated with 

implementing the rule, because all of 

the actions required by the rule are 

already practiced by the affected 

institutions. The Bureau expects that the 

amount of time required to implement 

each of the proposed 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 proposed rule 

would be the provision of certain 

appraisals and other valuations to 

consumers. Under the proposed rule, 

copies of all appraisals and other 

valuations conducted in connection 

with an application for a loan to be 

secured by a first lien must be furnished 

to applicants free of charge within 3 

days of application, and these copies 

may be delivered physically or 

electronically. Currently, ECOA requires 

that free copies be provided upon 

request. From outreach, the Bureau 

learned that it is customary to send 

consumers a copy of all valuations if the 

loan closes, but firms differed in their 

practices of sending out copies of 

valuations for loans that did not close.48

Therefore, the Bureau considers the 

incremental paperwork burden the cost 

of reviewing the rule, staff training, and 

the cost of sending out copies of 

appraisals and other valuations to 

consumers who apply for loans that do 

not close, but reach the stage where an 

appraisal or other valuation is 

conducted. 

C. Summary of Estimated Burden for 

CFPB Respondents 

The total annualized on-going 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 74,500 hours 

and the annualized ongoing burden for 

all non-depository institutions that 

originate mortgage loans is estimated to 

be 47,800 hours. These respondents are 

estimated to incur an additional 5,800 

hours and 4,600 hours in one-time 

burden, respectively. As discussed 

previously, for purposes of the PRA 

analysis under this proposed rule, the 

Bureau would assume roughly 23,900 

on-going burden hours and 2,300 onetime hours for the non-depository 

institutions.49

D. Comments 

Comments are specifically requested 

concerning: (i) Whether the proposed 

collections of information are necessary 

for the proper performance of the 

functions of the Bureau, including 

whether the information will have 

practical utility; (ii) the accuracy of the 

estimated burden associated with the 

proposed collections of information; (iii) 

how to enhance the quality, utility, and 

clarity of the information to be 

collected; and (iv) how to minimize the 

burden of complying with the proposed 

collections of information, including the 

application of automated collection 

techniques or other forms of information 

technology. All comments will become 

a matter of public record. Comments on 

the collection of information 

requirements should be sent to the 

Office of Management and Budget 

(OMB), Attention: Desk Officer for the 

Consumer Financial Protection Bureau, 

Office of Information and Regulatory 

Affairs, Washington, DC 20503, or by 

the Internet to http:// 

oira_submission@omb.eop.gov, with 

copies to the Bureau at 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. 

VIII. Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed changes to the 

text of the regulation and official 

interpretation. New language is shown 

inside flbold-faced arrowsfi, while 


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Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 50403 

language that would be deleted is set off 

with øbold-faced brackets¿. 

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 of Consumer 

Financial Protection proposes to amend 

12 CFR part 1002 and the Official 

Interpretations, as follows: 

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. Revise § 1002.14 to read as follows: 

§ 1002.14 Rules on providing øappraisal 

reports¿fl appraisals and valuationsfi. 

(a) Providing appraisalsfl and 

valuationsfi. fl(1) In general.fi A 

creditor shall provide flan applicant 

fia copy of øan appraisal report 

used¿flall written appraisals and 

valuations developed fiin connection 

with an application for credit that is to 

be secured by a flfirst filien on a 

dwelling. øA creditor shall comply with 

either paragraph (a)(1) or (a)(2) of this 

section.¿flA creditor shall provide a 

copy of each such written appraisal or 

valuation 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. 

Notwithstanding the foregoing, an 

applicant may waive the right to receive 

a copy three business days prior to 

consummation and agree to receive the 

copy at or before consummation, except 

where otherwise prohibited by law.fi 

ø(1) Routine delivery. A creditor may 

routinely provide a copy of an appraisal 

report to an applicant (whether credit is 

granted or denied or the application is 

withdrawn). 

(2) Upon request. A creditor that does 

not routinely provide appraisal reports 

shall provide a copy upon an 

applicant’s written request. 

(i) Notice. A creditor that provides 

appraisal reports only upon request 

shall notify an applicant in writing of 

the right to receive a copy of an 

appraisal report. The notice may be 

given at any time during the application 

process but no later than when the 

creditor provides notice of action taken 

under § 1002.9 of this part. The notice 

shall specify that the applicant’s request 

must be in writing, give the creditor’s 

mailing address, and state the time for 

making the request as provided in 

paragraph (a)(2)(ii) of this section. 

(ii) Delivery. A creditor shall mail or 

deliver a copy of the appraisal report 

promptly (generally within 30 days of 

receipt by the creditor) after the creditor 

receives an applicant’s request, receives 

the report, or receives reimbursement 

from the applicant for the report, 

whichever is last to occur. A creditor 

need not provide a copy when the 

applicant’s request is received more 

than 90 days after the creditor has 

provided notice of action taken on the 

application under § 1002.9 of this part 

or 90 days after the application is 

withdrawn.¿ 

fl(2) Disclosure. For applications 

subject to paragraph (a)(1) of this 

section, a creditor shall provide an 

applicant with a written disclosure, not 

later than the third business day after 

the creditor receives an application, of 

the applicant’s right to receive a copy of 

all written appraisals and valuations 

developed in connection with such 

application. 

(3) Reimbursement. A creditor shall 

not charge an applicant for providing a 

copy of written appraisals and 

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 

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.).fi 

ø(b) Credit unions. A creditor that is 

subject to the regulations of the National 

Credit Union Administration on making 

copies of appraisal reports available is 

not subject to this section.¿ 

ø(c)¿fl(b)fi Definitions. For purposes 

of paragraph (a) of this sectionø, the 

term dwelling¿fl: 

(1) Consummation. The term 

‘‘consummation’’ means the time that a 

consumer becomes contractually 

obligated on a credit transaction. 

(2) Dwelling. The term ‘‘dwelling’’fi 

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. øThe term 

appraisal report means the document(s) 

relied upon by a creditor in evaluating 

the value of the dwelling.¿ 

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

means any estimate of the value of a 

dwelling developed in connection with 

a creditor’s decision to provide credit.fi 

3. Appendix C to part 1002 is 

amended by revising the sixth sentence 

in first paragraph, and sample Form C– 

9 is revised to 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 øan 

appraisal¿flappraisals and valuationsfi 

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 øan 

Appraisal¿flAppraisals and Valuationsfi. 

øYou have the right to a copy of the 

appraisal report used in connection with 

your application for credit. If you wish a 

copy, please write to us at the mailing 

address we have provided. We must hear 

from you no later than 90 days after we notify 

you about the action taken on your credit 

application or you withdraw your 

application. 

øIn your letter, give us the following 

information:]¿ 

flWe 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.fi 

* * * * * 

4. Supplement I to part 1002 is 

amended by revising Section 1002.14 to 

read as follows: 


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50404 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

Supplement I to Part 1002—Official 

Interpretations 

* * * * * 

flSection 1002.14—Rules on Providing 

øAppraisal Reports¿flAppraisals and 

Valuationsfi 

14(a) Providing appraisalsfl and 

valuationsfi. 

fl1. Multiple applicants. If there is more 

than one applicant the written disclosure 

about written appraisals and valuations, and 

the copies of written appraisals and 

valuations, need only be given to one 

applicant, but it must be given to the primary 

applicant where one is readily apparent. 

14(a)(1) In general.fi 

1. Coverage. This section covers 

applications for credit to be secured by a 

flfirst filien on a dwelling, as that term is 

defined in ø§ 1002.14(c)¿fl§ 1002.14(b)(2)fi, 

whether the credit is for a business purpose 

(for example, a loan to start a business) or a 

consumer purpose (for example, øa loan to 

finance a child’s education¿fla loan to 

purchase a homefi). 

2. Renewals. øThis section¿flSection 

1002.14(a)(1)fi applies when an applicant 

requests the renewal of an existing extension 

of credit and the creditor 

øobtains¿fldevelopsfi a new øappraisal 

report¿flwritten appraisal or valuationfi. 

This section does not apply when a creditor 

uses the øappraisal report¿flwritten 

appraisals and valuationsfi that were 

previously øobtained¿fl developed in 

connection with the prior extension of credit 

in orderfi to evaluate the renewal request. 

fl3. Written. For purposes of § 1002.14, a 

‘‘written’’ appraisal or valuation includes, 

without limitation, an appraisal or valuation 

received or developed by the creditor in 

paper form (hard copy); electronically, such 

as CD or email; or by any other similar 

media. But see § 1002.14(a)(5) regarding the 

provision of copies of appraisals and 

valuations to applicants via electronic means. 

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

the applicant to waive the timing 

requirement that written appraisals and 

valuations be provided no later than three 

business days prior to consummation if the 

creditor provides the copy at or before 

consummation, except where otherwise 

prohibited by law. An applicant’s waiver is 

effective under § 1002.14(a) if the applicant 

provides the creditor an affirmative oral or 

written statement waiving the 3-day timing 

requirement. If there is more than one 

applicant for credit in the transaction, any 

applicant may provide the statement.fi 

ø14(a)(2)(i) Notice. 

1. Multiple Applicants. When an applicant 

that is subject to this section involves more 

than one applicant, the notice about the 

appraisal report need only be given to one 

applicant, but it must be given to the primary 

applicant where one is readily apparent.¿ 

ø14(a)(2)(ii) Delivery.¿fl14(a)(3) 

Reimbursement.fi 

ø1. Reimbursement. Creditors may charge 

for photocopy and postage costs incurred in 

providing a copy of the appraisal report, 

unless prohibited by State or other law. If the 

consumer has already paid for the report—for 

example, as part of an application fee—the 

creditor may not require additional fees for 

the appraisal (other than photocopy and 

postage costs).¿ 

fl1. Photocopy, postage, or other costs. 

Creditors may not charge for photocopy, 

postage or other costs incurred in providing 

a copy of a written appraisal or valuation in 

accordance with this section. 

2. Reasonable fee for reimbursement. The 

regulation does not prohibit creditors from 

imposing fees that are reasonably designed to 

reimburse the creditor for costs incurred in 

connection with obtaining appraisal or 

valuation services, so long they are not 

increased to cover the costs of providing 

documentation under § 1002.14. However, 

creditors may not impose fees for 

reimbursement of the costs of an appraisal 

where otherwise provided by law. For 

instance, TILA prohibits a creditor from 

charging a consumer a fee for the 

performance of a second appraisal if the 

second appraisal is required under TILA 

section 129H(b)(2) (15 U.S.C. 1639h(b)(2)).fi 

ø14(c)¿14(b)fi Definitions. 

fl14(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 v. 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)(3) Valuation.fi 

1. øAppraisal reports. Examples of 

appraisal reports are:¿fl Examples of 

valuations. Examples of valuations 

include:fi 

i. A report prepared by an appraiser 

(whether or not licensed or certified), 

including written comments and other 

documents submitted to the creditor in 

support of 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, if a 

third-party appraisal report has not been 

used. 

iii. 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). 

fliv. Values 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. 

v. Values 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. 

vi. 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.fi 

2. Other øreports¿fldocumentationfi. 

øThe term ‘‘appraisal report’’ does not cover 

all documents relating to the value of the 

applicant’s property.¿flNot all documents 

that discuss or restate a valuation of an 

applicant’s property constitute ‘‘written 

appraisals and valuations’’ for purposes of 

§ 1002.14(a).fi Examples of øreports not 

covered are:¿fldocuments that discuss the 

valuation of the applicant’s property but 

nonetheless are not ‘‘written appraisals and 

valuations’’ include:fi 

i. Internal documents, øif a third-party 

appraisal report was used to establish the 

value of the property¿flthat merely restate 

the estimated value of the dwelling contained 

in a written appraisal or valuation being 

provided to the applicantfi. 

ii. Governmental agency statements of 

appraised value flthat are publically 

availablefi. 

iii. Valuations lists that are publicly 

available (such as published sales prices or 

mortgage amounts, tax assessments, and 

retail price ranges) and valuations such as 

manufacturers’ invoices for mobile homes. 

Dated: August 14, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–20422 Filed 8–17–12; 4:15 pm] 

BILLING CODE 4810–AM–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1005 

[Docket No. CFPB–2012–0036] 

Electronic Fund Transfers; Intent To 

Make Determination of Effect on State 

Laws (Maine and Tennessee) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Notice of intent to make 

preemption determination. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

publishing notice of its intent to 

consider and address requests received 

to determine whether certain provisions 

in the laws of Maine and Tennessee 

relating to unclaimed gift cards are 

inconsistent with and preempted by the 

requirements of the Electronic Fund 

Transfer Act and Regulation E. 

DATES: Comments must be received on 

or before October 22, 2012. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2012– 

0036, by any of the following methods: 


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