NCUA Releases Regulatory Alert to Remind Credit Unions of ECOA Valuations Rule

The National Credit Union Administration (NCUA) recently released Regulatory Alert 13-RA-07 which reminds credit unions of the Consumer Financial Protection Bureau’s (CFPB) new rule on real estate appraisals and valuations under the Equal Credit Opportunity Act (ECOA). The regulatory alert also serves to remind credit unions of the January 18, 2104, compliance date.

The rule covers applications for closed-end or open-end credit secured by a first lien on a dwelling. These include, but are not limited to:

  • Loans for consumer, business purposes, investment, or leisure purposes (such as a vacation home)
  • Consumer loans to purchase a home
  • Loss-mitigation transactions, such as loan modifications, short sales, and deed-in-lieu transactions, if they are credit transactions covered by Regulation B
  • Loans secured by mobile or manufactured homes
  • Reverse mortgages
  • Time-share loans if they are credit transactions covered by Regulation B

Under the ECOA Valuations Rule:

  • When you receive a mortgage loan application, you have three business days to notify the applicant of the right to receive a copy of appraisals and other written valuations.
  • You must promptly share copies of appraisals and other written valuations with the applicant. “Promptly” means upon completion of the application, or at least three business days before consummation (for closed-end credit) or account opening (for open-end credit), whichever is earlier.
  • The applicant can waive the right to receive copies of the appraisal or other written valuations in advance of the closing (except if the transaction involves a higher-priced mortgage loan—see discussion below). If the applicant waives the right to receive advance copies, you must still deliver the copies at or prior to consummation or account opening.
  • If you decide not to consummate the loan or open the account, and the applicant has provided a waiver, you must send the applicant a copy of the appraisal and other written valuations within 30 days after your decision.

To comply with the ECOA Valuations Rule:

  • You must notify the applicant in writing within three business days of application of the right to receive a copy of any appraisal developed in connection with the application. Appendix C to the rule includes sample text for this disclosure.
  • If you have an application that was not originally going to be secured by a first lien on a dwelling and you later determine that it will be secured by a first lien on a dwelling, then you have three business days after you determine the change has occurred to notify the applicant about the right to receive appraisals.
  • When processing an application for a closed-end loan, you must deliver copies of appraisals and other written valuations “promptly upon completion,” or three business days before consummation, whichever is earlier.
  • When processing an application for an open-end loan, you must deliver copies of appraisals and other written valuations “promptly upon completion,” or three business days before account opening, whichever is earlier.
  • You cannot charge the applicant for fees for photocopying or to cover the cost of postage to mail copies of appraisals or other written valuations you provide. However, you can charge a reasonable fee to reimburse the cost of developing an appraisal or other written valuation, unless applicable federal or state law prohibits or otherwise restricts it. You cannot condition providing copies on payment of this fee.
  • For applicants who waive the right to receive the required copies at least three business days before consummation or account opening, you must provide the copies either at, or prior to, consummation or account opening.

The NCUA alert also links to the full text of the final rule, and CFPB compliance resources.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.