We have a construction-only loan for the construction of a dwelling, and the loan has a twelve-month term. We have a second lien on the land underlying the dwelling and a first lien on the dwelling itself. Do the Equal Credit Opportunity Act (ECOA) appraisal requirements apply?

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Yes, we believe that the ECOA appraisal requirements do apply to this loan. The ECOA appraisal requirements apply to any loan “secured by a first lien on a dwelling,” and there is no exception for construction or temporary loans.

For resources related to our guidance, please see:

  • Regulation B, 12 CFR 1002.14(a) (“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. A creditor shall provide a copy of each such appraisal or other written valuation 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. . . .”)