On April 29, 2020 the Consumer Financial Protection Bureau (CFPB) published a Compliance Aid dealing with the ECOA Valuation Rule. The Aid, which is in Question/Answer format, was effective upon publication.
Under the Equal Credit Opportunity Act (ECOA) and its implementing Regulation B, creditors are required to provide applicants for first-lien loans on a dwelling with copies of appraisals, as well as other written valuations (collectively, “valuations”), developed in connection with the application (the “ECOA Valuations Rule”). Is there flexibility under the ECOA Valuations Rule for when creditors must provide valuations to applicants?
Yes. The ECOA Valuations Rule already includes flexibility that allows an applicant to waive certain timing requirements of the Rule. 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 September 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.
This Compliance Aid provides needed clarification during this time of the Pandemic, but unfortunately it only completes half the job. A copy of the appraisal is required by ECOA. That three business delay has been eliminated, as explained above. However Section 1026.35(c) of Regulation Z also requires a copy of the appraisal be deliver three business days before consummation for certain higher-priced mortgage loans (HPML). There has been no guidance that provides relief from the HPML requirement. Caution is advised.