IBA Compliance Connection

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It is our practice to order appraisals for collateral monitoring during the term of our residential loans, which we do not charge the borrowers for. When loans are renewed, we reuse these existing appraisals if they are less than 12 months old. Under Regulation B, can we charge a fee for providing these appraisals to borrowers for their renewals?

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Yes, in our view, you may charge a fee when you provide a borrower with a previously developed appraisal for a loan renewal, provided that the fee is reasonable and used to reimburse you for the cost of that appraisal.

Regulation B permits creditors to charge “a reasonable fee to reimburse the creditor for the cost of the appraisal or other written valuation unless otherwise prohibited by law.” We are not aware of any law prohibiting you from requiring reimbursement when you provide the appraisal at the time of renewal if you previously developed the appraisal without charging the borrower.

The appraisal reimbursement fee may include administration fees charged to the creditor by an appraisal management company, but may not include copying, postage or other costs incurred in providing the borrower with the copies of the appraisal.

For resources related to our guidance, please see:

  • Regulation B, 12 CFR 1002.14(a)(3) (“A creditor shall not charge an applicant for providing a copy of appraisals and other written valuations as required under this section, but may require applicants to pay a reasonable fee to reimburse the creditor for the cost of the appraisal or other written valuation unless otherwise provided by law.”)
  • Official Interpretations, Regulation B, Section 1002, Paragraph 14(a)(3), Comment 2 (“Section 1002.14(a)(3) does not prohibit a creditor from imposing a reasonable fee to reimburse the creditor’s costs of the appraisal or other written valuation, so long as the fee is not increased to cover the costs of providing copies of such appraisals or other written valuations under § 1002.14(a)(1). A creditor’s cost may include an administration fee charged to the creditor by an appraisal management company as defined in 12 U.S.C. 3350(11).”)
  • Official Interpretations, Regulation B, Section 1002, Paragraph 14(a)(3), Comment 2 (“[C]reditors may not impose fees for reimbursement of the costs of an appraisal or other valuation where otherwise prohibited by law. For instance, a creditor may not charge a consumer a fee for the performance of a second appraisal if the second appraisal is required under 15 U.S.C. 1639h(b)(2) and 12 CFR 1026.35(c).”)