Whether ECOA’s requirements regarding appraisals apply depends on whether the CILA mortgage is a first lien and whether the property is a 1 – 4 unit dwelling.

The Official Interpretations to Regulation B make clear that its appraisal requirement “covers applications for credit to be secured by a first lien on a dwelling . . . whether the credit is for a business purpose . . . or a consumer purpose. . .” A dwelling is defined as “a residential structure that contains one to four units whether or not that structure is attached to real property.” The term includes, but is not limited to, individual condominium units, mobile homes, and manufactured homes.

Consequently, Regulation B’s appraisal requirements will apply unless the CILA mortgage is not a first lien or the CILA is not a 1 – 4 unit dwelling. 

Note that even if Regulation B does not apply, the loan is still subject to the FDIC’s regulations regarding appraisals. In other words, although you may not be required to provide applicants a copy of their appraisal, you still may be required to obtain an appraisal.

For resources related to our guidance, please see:

• Regulation B, 12 CFR 1002, Paragraph 14(a)(1), Comment 1 (“Section 1002.14 covers applications for credit to be secured by a first lien on a dwelling, as that term is defined in § 1002.14(b)(2), whether the credit is for a business purpose (for example, a loan to start a business) or a consumer purpose (for example, a loan to purchase a home).”)

• 12 USC 5519 (Exclusion for auto dealers from CFPB oversight)

• 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.”)

• Regulation B, 12 CFR 1002.14(b)(2) (“The term ‘dwelling’ means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.”)

• 12 CFR 323.3 (“An appraisal performed by a State certified or licensed appraiser is required for all real estate-related financial transactions except those in which: . . “)

• 12 CFR 323.2(i) (“Real estate-related financial transaction means any transaction involving: (1) The sale, lease, purchase, investment in or exchange of real property, including interests in property, or the financing thereof; or (2) The refinancing of real property or interests in real property; or (3) The use of real property or interests in property as security for a loan or investment, including mortgage-backed securities.”)