Under the qualified mortgage rule, lenders are required to provide borrowers with all appraisals ordered or requested in conjunction with a loan application, according to PrimeLending senior vice president Cindy Wortham.
However, lenders use certain products to validate the accuracy of the appraisal for internal purposes. In getting ready for the QM Jan. 10 effective date, lenders wanted clarification on whether internal reviews had to be disclosed to the consumer along with the actual appraisal.
CFPB officials finally clarified that products used to verify the appraisal do not need to be disclosed, Wortham told NMN.
If an appraisal product provides a range of values or an appraisal product states a certain confidence level in the appraisal, those do not have to be provided to the consumer if the lender ordered it for safety and soundness purposes, the SVP for compliance said.
The actual appraisal that estimates a propertys value must be disclosed to the borrower at least three days prior to closing.
PrimeLending is a retail lender based in Dallas.