When we renew a commercial loan, we perform an analysis to determine whether we can reuse the existing appraisal or evaluation (versus developing a new appraisal or evaluation) under the Interagency Appraisal and Evaluation Guidelines. Does that analysis trigger the Equal Credit Opportunity Act (ECOA) appraisal notice requirements? Do we need to send a copy of our analysis to the customer?

The ECOA’s appraisal notice requirement is triggered when your bank receives the application for a credit renewal, not by your bank’s analysis as to whether an appraisal or evaluation is still valid. The ECOA requires a bank to notify an applicant for credit secured by a first lien on a dwelling of their right to receive copies of appraisals that may be developed in connection with their application. An application is defined as an oral or written request for an extension of credit, including credit renewal. Therefore, an application for credit renewal triggers the notice requirement.

In the case of renewals, if you are relying on an existing appraisal or evaluation, you do not need to provide the existing appraisal or evaluation to the applicant. However, if you develop a new appraisal or evaluation, you must send that to the applicant.

Your review of an existing appraisal or evaluation for the purposes of determining its current validity also may result in the need to send the applicant your bank’s internal document if it assigns a different value to the property. However, if your analysis does not generate a different estimate of the property value, neither that analysis nor any existing appraisals or evaluations need to be sent to the applicant.

For resources related to our guidance, please see:

ECOA Regulation B, 12 CFR 1002.14(a)(1) (“A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling.”)

ECOA Regulation B, 12 CFR 1002.14(a)(2) (“For applications subject to paragraph (a)(1) of this section, a creditor shall mail or deliver to an applicant, not later than the third business day after the creditor receives an application for credit that is to be secured by a first lien on a dwelling, a notice in writing of the applicant's right to receive a copy of all written appraisals developed in connection with the application.”)

ECOA Regulation B, 12 CFR 1002.2(f) (“Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested.”)

ECOA Regulation B, 12 CFR 1002.2(q) (“[E]xtension of credit means the granting of credit in any form (including, but not limited to … the refinancing or other renewal of credit …).”)

Interagency Appraisal and Evaluation Guidelines (“If an evaluation is permitted under this exemption, an institution may use an existing appraisal or evaluation as long as the institution verifies and documents that the appraisal or evaluation continues to be valid.”)

Official Interpretations, 12 CFR 1002, Paragraph 14(a)(1), Comment 2 (“Section 1002.14(a)(1) applies when an applicant requests the renewal of an existing extension of credit and the creditor develops a new appraisal or other written valuation. Section 1002.14(a)(1) does not apply to the extent a creditor uses the appraisals and other written valuations that were previously developed in connection with the prior extension of credit to evaluate the renewal request.”)

ECOA Regulation B, 12 CFR Part 1002, Appendix C – Sample Notification Forms (“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.”)

ECOA Implementation Guide (“A document your staff prepares that assigns value to the property” is a valuation under ECOA. However, “an appraisal review that does not itself state a different estimate from the appraisal would not be a valuation you must provide to the applicant.”)