Sec. 3. Reconsideration of value
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Section 129E of the Truth In Lending Act ( 15 U.S.C. 1639e ) is amended— by redesignating subsections
(j)and
(k)as subsections
(k)and (l), respectively; and by inserting after subsection
(i)the following: In this section: The term unacceptable appraisal practice means an appraisal report that— uses unsupported or subjective terms to assess or rate the property without providing a foundation for analysis and contextual information; uses inaccurate or incomplete data about the subject property, the neighborhood, the market area, or any comparable property; includes references, statements or comparisons about crime rates or crime statistics, whether objective or subjective; relies in the appraisal analysis on comparable properties that were not personally inspected by the appraiser when required by the appraisal’s scope of work; relies in the appraisal analysis on inappropriate comparable properties; fails to use comparable properties that are more similar, or nearer, to the subject property without adequate explanation; uses comparable property data provided by any interested party to the transaction without verification by a disinterested party; uses inappropriate adjustments for differences between the subject property and the comparable properties that do not reflect the market’s reaction to such differences; or fails to make proper adjustments, including time adjustments for differences between the subject property and the comparable properties when necessary. The term unsupported means, with respect to an appraisal report or an appraiser’s opinion of value, that the appraisal report or the opinion of value is not supported by relevant evidence and logic. In connection with a consumer credit transaction secured by a consumer’s principal dwelling, a creditor shall have a review and resolution procedure for a consumer-initiated reconsideration of value or subsequent appraisal that complies with the following requirements: The creditor shall complete its own appraisal review before delivering the appraisal to the consumer. The creditor shall have policies and procedures that provide the consumer with a process to submit one request for a reconsideration of value and subsequent appraisal prior to the loan closing or within 60 calendar days of denial of a credit application if the consumer believes the appraisal report may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination. At the time of application and upon delivery of the appraisal report to the consumer, the creditor shall provide a written disclosure to the consumer describing the process for requesting a reconsideration of value or subsequent appraisal, which written disclosure shall include a standardized format for the consumer to submit the request for a reconsideration of value, including— the name of the borrower; the property address; the effective date of the appraisal; the appraiser’s name; the date of the request; a description of why the consumer believes the appraisal report may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination; any additional information, data, including not more than 5 alternative comparable properties and the related data sources that the consumer would like the appraiser to consider; and an explanation of why the new information, data, or comparable properties support the reconsideration of value. The creditor shall obtain the necessary information from the consumer if the consumer’s request for reconsideration of value or subsequent appraisal is unclear or requires more information. The creditor shall have a standardized format to communicate the reconsideration of value to the appraiser, which format shall include— the name of the borrower; the property address; the effective date of the appraisal; the appraiser’s name; the date of the request; a description of any area of the appraisal report that may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination; any additional information, data, including not more than 5 alternative comparable properties and the related data sources that the consumer would like the appraiser to consider; an explanation of why the new information, data, or comparable properties support the reconsideration of value; a definition of turn-time expectations for the appraiser to communicate the reconsideration of value results back to the creditor; instructions for delivering the reconsideration of value response as part of a revised appraisal report that includes commentary on conclusions regardless of the outcome; and a reference for appraisers on how to correct minor appraisal issues or non-material errors not related to the reconsideration of value process. If the creditor identifies material deficiencies in the appraisal report that are not corrected or addressed by the appraiser upon request of the creditor, including through a consumer-initiated reconsideration of value, or if there is evidence of unsupported or unacceptable appraisal practices, the creditor shall— at the request of the consumer, order a subsequent appraisal at the creditor's own expense; and forward the appraisal report and the creditor’s summary of findings to the appropriate appraisal licensing agency or regulatory board. If the creditor has reason to believe that an appraisal report reflects discrimination, the creditor shall— order a subsequent appraisal, at the creditor's own expense; forward the appraisal report and the creditor’s summary of findings to the appropriate local, State, or Federal enforcement agency; and upon a final determination of discrimination by the appropriate local, State, or Federal enforcement agency, receive a reimbursement from the appraiser covering the cost of the subsequent appraisal ordered by the creditor. Except as provided in clause (ii), in this paragraph, the term reason to believe means that the creditor has reviewed the applicable law and available evidence and determined that a potential violation of Federal or state antidiscrimination law exists. The available evidence may include the appraisal report, loan files, written communications, credible observations by persons with direct knowledge, statistical analysis, and the appraiser’s response to the request for a reconsideration of value. The term reason to believe does not mean that there is a final legal determination of discrimination. The creditor shall retain all documentation and written communications related to the request for reconsideration of value or subsequent appraisal in the loan file during the seven-year period beginning on the date on which the consumer submitted the credit application. This subsection is consistent with the exceptions to the appraiser independence requirements found in Section 129E(c) of the Truth in Lending Act ( 15 U.S.C. 1639e(c) ). Nothing in this subsection shall be construed to require a creditor to submit a reconsideration of value to the original appraiser before ordering a subsequent appraisal from a subsequent appraiser. . Section 129E(g) of the Truth in Lending Act ( 15 U.S.C. 1639e(g) ) is amended— in paragraph (1), by striking paragraph (2), the Board and inserting paragraphs
(2)and (3), the Bureau ; and by adding at the end the following: Not later than 1 year after the date of enactment of this paragraph, the Federal Housing Finance Agency shall issue a final rule after notice and comment and issue such guidance as may be necessary to carry out and enforce subsection (j). .
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Sec. 3
Reconsideration of value
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