The Equal Credit Opportunity Act (ECOA) Valuations Rule, which mandates that all borrowers confirm statements prior to receiving an electronic copy of any appraisal report, becomes effective Jan. 18.
Mercury Network, which is the flagship product of a la mode for the lending industry, has been updated with automated compliance tools for lenders and appraisal management companies (AMCs) to add to its Vendor Management Platform; the software creates a full audit trail to prove compliance with the new regulation.
The Valuations Rule essentially requires that the lender or AMC notifies the borrower of several things prior to allowing them to download the appraisal report, including:
- Their right to a copy of the appraisal regardless of whether the loan closes;
- Their right to a paper copy of the appraisal report as opposed to a PDF; and
- The minimum hardware/software requirements to be able to access the appraisal in PDF format.
Additionally, lenders and AMCs must demonstrate the borrower’s ability to download and view a PDF file prior to letting them download the appraisal report in PDF format.
Mercury Network’s secure borrower delivery tool now automatically notifies the borrower of all requisite notifications in accordance with the ECOA prior to the secure electronic delivery of the appraisal report.
Some lenders and AMCs are still delivering appraisal reports as simple attachments in unencrypted email messages. This practice is a violation of the Gramm-Leach-Bliley Act, and can have serious consequences. Many lenders and AMCs have already eliminated those risks by using an appraisal delivery tool offered by appraisal management software platforms, but many of those platforms have yet to address the new ECOA requirements.
“More than 600 lenders and AMCs use Mercury Network to manage their collateral valuation pipelines, so we have to be innovative and on the forefront of compliance,” said Jennifer Miller, president of a la mode’s Mortgage Solutions Division. “These automated safeguards provide tremendous time savings and risk mitigation for our clients, while also allowing them to deliver far better service to their borrowers.”