The Consumer Financial Protection Bureau (CFPB) took steps to make it easier for consumers with urgent financial needs to obtain access to mortgage credit more quickly in the middle of the COVID-19 pandemic. Valuation rule changes applicable to appraisers also were included, according to a press release from the CFPB.
“The steps we are taking today will help consumers facing financial emergencies obtain access to mortgage credit faster,” CFPB Director Kathy Kraninger said in the release. “The pandemic is resulting in consumers facing various challenges, and our temporary and targeted solutions are intended to ensure that consumers receive the credit they need in a timely manner.”
The release also outlined valuation rule changes under the Equal Credit Opportunity Act (ECOA).
Under the ECOA, creditors are required to provide applicants for first-lien loans on a dwelling with copies of appraisals, as well as other written valuations, developed in connection with the application. As to whether there is flexibility under the ECOA Valuations Rule for when creditors must provide valuations to applicants, the CFPB said the answer is yes.
“The ECOA Valuations Rule already includes flexibility that allows an applicant to waive certain timing requirements of the rule,” the bureau stated. “For valuations developed in connection with an application that are subject to the ECOA Valuations Rule, creditors must generally provide applicants with copies of all valuations promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier.
“However, as noted in a Sept. 14, 2018, Statement on Supervisory Practices Regarding Financial Institutions and Consumers Affected by a Major Disaster or Emergency, the ECOA Valuations Rule permits an applicant to waive the timing requirement through an affirmative oral or written statement and agree to receive any copy at or before consummation or account opening, except where otherwise prohibited by law. This regulatory flexibility available under the ECOA Valuations Rule can expedite access to credit secured by a first lien on a dwelling for consumers affected by the COVID-19 pandemic.”
A factsheet from the CFPB said that the rule’s timing requirement can be waived in two instances:
- If the applicant provides the creditor an affirmative oral or written waiver statement no later than three business days prior to consummation or account opening.
- Within three business days of consummation or account opening, when the waiver pertains solely to the applicant’s receipt of a copy of an appraisal or other written valuation that contains only clerical changes from a previous version.
“Specific to the second category, the revisions must have no impact on the estimated value of the property and no impact on the calculation or methodology used to derive the estimate. Also, the applicant must have received the original appraisal or written valuation three or more business days before consummation or account opening,” the CFPB stated. “If a waiver is obtained, the creditor must still provide the applicant copies of all the application-related appraisals (or other written valuation), but it may do so at or before consummation or account opening, except where otherwise prohibited by law.”
For more details surrounding the ECOA factsheets on the transactions coverage and the delivery of appraisals go to https://www.consumerfinance.gov/policy-compliance/guidance/equal-credit-opportunity-act-valuation-rule/.