A brand-new consumer protection rule has just gone into effect in Naples and around the country, made to empower mortgage applicants and homebuyers by providing them with more information as to why a loan was rejected or accepted. This will help to identify cases of discrimination as well as provide appraisals and other data in a time-conscious manner so that the buyer can contest the results.
Here are some specifics about the rule, which was enacted on January 18th:
- Lenders must provide for the applicants a free copy of any valuation, which may consist of several commonly-used reports that include an appraisal report, an automated valuation model report, or a broker price opinion.
- Lenders have three days after the submission of a mortgage application to inform the applicant that they will “promptly get a copy of any appraisal.”
- Lenders must provide these copies quickly even if the loan doesn’t close.
- Lenders must give an applicant the copies either “promptly after the reports are completed” or three days before the loan closes – whichever comes first.
- Applicants may be charged by the lender a “reasonable fee” for the coast of the valuation.
- Finally, lenders may ask an applicant to waive the 3-day deadline. If the applicant agrees, the copies will be provided at closing.
Any buyer who does not waive his or her right to early documents should receive a copy of the appraisal as early as possible, as the extra time to review the underlying data used by the appraiser can be very valuable.
This new rule applies only to first liens, as well as construction loans and reverse mortgages – all others, including second mortgages and home equity loans, are not affected.