15 U.S.C. § 1639e — Appraisal independence requirements

Page 1518 TITLE 15—COMMERCE AND TRADE § 1639e 2178, 2181; Pub. L. 114–94, div. G, title LXXXIX, § 89003(2), Dec. 4, 2015, 129 Stat. 1801; Pub. L. 115–174, title I, § 108, May 24, 2018, 132 Stat. 1304.) Editorial Notes REFERENCES IN TEXT This part, referred to in subsec. (c)(1)(D), was in the original ‘‘this subtitle’’, and was translated as reading ‘‘this chapter’’, meaning chapter 2 of title I of Pub. L. 90–321, to reflect the probable intent of Congress. Title I of Pub. L. 90–321 does not contain subtitles. The Real Estate Settlement Procedures Act of 1974, referred to in subsec. (g)(2)(A), (4), is Pub. L. 93–533, Dec. 22, 1974, 88 Stat. 1724, which is classified prin- cipally to chapter 27 (§ 2601 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set out under section 2601 of Title 12 and Tables. The Flood Disaster Protection Act of 1973, referred to in subsec. (g)(2)(B), is Pub. L. 93–234, Dec. 31, 1973, 87 Stat. 975. For complete classification of this Act to the Code, see Short Title of 1973 Amendment note set out under section 4001 of Title 42, The Public Health and Welfare, and Tables. The National Flood Insurance Act of 1968, referred to in subsec. (i)(1), is title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, which is classified principally to chap- ter 50 (§ 4001 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 4001 of Title 42 and Tables. AMENDMENTS 2018—Subsec. (c). Pub. L. 115–174, § 108(1)(A), (B), (D), designated existing provisions as par. (1) and inserted heading, redesignated former pars. (1) to (4) as subpars. (A) to (D), respectively, of par. (1) and realigned mar- gins, and added par. (2). Subsec. (c)(1). Pub. L. 115–174, § 108(1)(B), (C), which directed substitution of ‘‘The Bureau’’ for ‘‘The Board’’ in introductory provisions, and ‘‘the Bureau’’ for ‘‘the Board’’ wherever appearing, duplicated the amendment made by Pub. L. 111–203, § 1100A(2), which had already been executed. See 2010 Amendment note below. Subsec. (i)(3), (4). Pub. L. 115–174, § 108(2), added pars. (3) and (4). 2015—Subsec. (c)(1). Pub. L. 114–94 struck out ‘‘pre- dominantly’’ after ‘‘operates’’. 2010—Pub. L. 111–203, § 1100A(2), which directed substi- tution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing in Pub. L. 90–321, was executed to this section, which was added to Pub. L. 90–321 by section 1461(a) of Pub. L. 111–203. Subsec. (j). Pub. L. 111–203, § 1462, added subsec. (j). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by section 1100A(2) of Pub. L. 111–203 ef- fective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employ- ees. Amendment by section 1462 of Pub. L. 111–203 effec- tive on the date on which final regulations imple- menting that amendment take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of this title. EFFECTIVE DATE Section effective on the date on which final regula- tions implementing such section take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1601 of this title. EXEMPTIONS AND MODIFICATIONS Pub. L. 111–203, title XIV, § 1461(b), July 21, 2010, 124 Stat. 2181, provided that: ‘‘The Board may prescribe rules that revise, add to, or subtract from the criteria of section 129D(b) of the Truth in Lending Act [15 U.S.C. 1639d(b)] if the Board determines that such rules are in the interest of consumers and in the public inter- est.’’ § 1639e. Appraisal independence requirements (a) In general It shall be unlawful, in extending credit or in providing any services for a consumer credit transaction secured by the principal dwelling of the consumer, to engage in any act or practice that violates appraisal independence as de- scribed in or pursuant to regulations prescribed under this section. (b) Appraisal independence For purposes of subsection (a), acts or prac- tices that violate appraisal independence shall include— (1) any appraisal of a property offered as se- curity for repayment of the consumer credit transaction that is conducted in connection with such transaction in which a person with an interest in the underlying transaction com- pensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person, ap- praisal management company, firm, or other entity conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the ap- praiser; (2) mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit; (3) seeking to influence an appraiser or oth- erwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and (4) withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided for in accord- ance with the contract between the parties. (c) Exceptions The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, em- ployee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an ap- praiser to undertake 1 or more of the following: (1) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal. (2) Provide further detail, substantiation, or explanation for the appraiser’s value conclu- sion. Page 1519 TITLE 15—COMMERCE AND TRADE § 1639e 1 So in original. Probably should be ‘‘subsection’’. (3) Correct errors in the appraisal report. (d) Prohibitions on conflicts of interest No certified or licensed appraiser conducting, and no appraisal management company pro- curing or facilitating, an appraisal in connec- tion with a consumer credit transaction secured by the principal dwelling of a consumer may have a direct or indirect interest, financial or otherwise, in the property or transaction involv- ing the appraisal. (e) Mandatory reporting Any mortgage lender, mortgage broker, mort- gage banker, real estate broker, appraisal man- agement company, employee of an appraisal management company, or any other person in- volved in a real estate transaction involving an appraisal in connection with a consumer credit transaction secured by the principal dwelling of a consumer who has a reasonable basis to be- lieve an appraiser is failing to comply with the Uniform Standards of Professional Appraisal Practice, is violating applicable laws, or is oth- erwise engaging in unethical or unprofessional conduct, shall refer the matter to the applicable State appraiser certifying and licensing agency. (f) No extension of credit In connection with a consumer credit trans- action secured by a consumer’s principal dwell- ing, a creditor who knows, at or before loan con- summation, of a violation of the appraisal inde- pendence standards established in subsections 1 (b) or (d) shall not extend credit based on such appraisal unless the creditor documents that the creditor has acted with reasonable diligence to determine that the appraisal does not materi- ally misstate or misrepresent the value of such dwelling. (g) Rules and interpretive guidelines (1) In general Except as provided under paragraph (2), the Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau may jointly issue rules, interpretive guidelines, and general statements of policy with respect to acts or practices that violate appraisal independence in the provision of mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer and mortgage bro- kerage services for such a transaction, within the meaning of subsections (a), (b), (c), (d), (e), (f), (h), and (i). (2) Interim final regulations The Board shall, for purposes of this section, prescribe interim final regulations no later than 90 days after July 21, 2010, defining with specificity acts or practices that violate ap- praisal independence in the provision of mort- gage lending services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage serv- ices for such a transaction and defining any terms in this section or such regulations. Rules prescribed by the Board under this para- graph shall be deemed to be rules prescribed by the agencies jointly under paragraph (1). (h) Appraisal report portability Consistent with the requirements of this sec- tion, the Board, the Comptroller of the Cur- rency, the Federal Deposit Insurance Corpora- tion, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau may jointly issue regulations that address the issue of appraisal report port- ability, including regulations that ensure the portability of the appraisal report between lend- ers for a consumer credit transaction secured by a 1-4 unit single family residence that is the principal dwelling of the consumer, or mortgage brokerage services for such a transaction. (i) Customary and reasonable fee (1) In general Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being ap- praised. Evidence for such fees may be estab- lished by objective third-party information, such as government agency fee schedules, aca- demic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management com- panies. (2) Fee appraiser definition (A) In general For purposes of this section, the term ‘‘fee appraiser’’ means a person who is not an em- ployee of the mortgage loan originator or appraisal management company engaging the appraiser and is— (i) a State licensed or certified appraiser who receives a fee for performing an ap- praisal and certifies that the appraisal has been prepared in accordance with the Uni- form Standards of Professional Appraisal Practice; or (ii) a company not subject to the re- quirements of section 3353 of title 12 that utilizes the services of State licensed or certified appraisers and receives a fee for performing appraisals in accordance with the Uniform Standards of Professional Ap- praisal Practice. (B) Rule of construction related to appraisal donations If a fee appraiser voluntarily donates ap- praisal services to an organization eligible to receive tax-deductible charitable con- tributions, such voluntary donation shall be considered customary and reasonable for the purposes of paragraph (1). (3) Exception for complex assignments In the case of an appraisal involving a com- plex assignment, the customary and reason- able fee may reflect the increased time, dif- ficulty, and scope of the work required for such an appraisal and include an amount over and above the customary and reasonable fee for non-complex assignments. (j) Sunset Effective on the date the interim final regula- tions are promulgated pursuant to subsection Page 1520 TITLE 15—COMMERCE AND TRADE § 1639f (g), the Home Valuation Code of Conduct an- nounced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or ef- fect. (k) Penalties (1) First violation In addition to the enforcement provisions re- ferred to in section 1640 of this title, each per- son who violates this section shall forfeit and pay a civil penalty of not more than $10,000 for each day any such violation continues. (2) Subsequent violations In the case of any person on whom a civil penalty has been imposed under paragraph (1), paragraph (1) shall be applied by substituting ‘‘$20,000’’ for ‘‘$10,000’’ with respect to all sub- sequent violations. (3) Assessment The agency referred to in subsection (a) or (c) of section 1607 of this title with respect to any person described in paragraph (1) shall as- sess any penalty under this subsection to which such person is subject. (Pub. L. 90–321, title I, § 129E, as added Pub. L. 111–203, title XIV, § 1472(a), July 21, 2010, 124 Stat. 2187; amended Pub. L. 115–174, title I, § 102, May 24, 2018, 132 Stat. 1299.) Editorial Notes AMENDMENTS 2018—Subsec. (i)(2). Pub. L. 115–174 designated exist- ing provisions as subpar. (A) and inserted heading, re- designated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A) and realigned margins, and added subpar. (B). Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the date on which final regula- tions implementing such section take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1601 of this title. § 1639f. Requirements for prompt crediting of home loan payments (a) In general In connection with a consumer credit trans- action secured by a consumer’s principal dwell- ing, no servicer shall fail to credit a payment to the consumer’s loan account as of the date of re- ceipt, except when a delay in crediting does not result in any charge to the consumer or in the reporting of negative information to a consumer reporting agency, except as required in sub- section (b). (b) Exception If a servicer specifies in writing requirements for the consumer to follow in making payments, but accepts a payment that does not conform to the requirements, the servicer shall credit the payment as of 5 days after receipt. (Pub. L. 90–321, title I, § 129F, as added Pub. L. 111–203, title XIV, § 1464(a), July 21, 2010, 124 Stat. 2184.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the date on which final regula- tions implementing such section take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1601 of this title. § 1639g. Requests for payoff amounts of home loan A creditor or servicer of a home loan shall send an accurate payoff balance within a reason- able time, but in no case more than 7 business days, after the receipt of a written request for such balance from or on behalf of the borrower. (Pub. L. 90–321, title I, § 129G, as added Pub. L. 111–203, title XIV, § 1464(b), July 21, 2010, 124 Stat. 2184.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the date on which final regula- tions implementing such section take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1601 of this title. § 1639h. Property appraisal requirements (a) In general A creditor may not extend credit in the form of a higher-risk mortgage to any consumer with- out first obtaining a written appraisal of the property to be mortgaged prepared in accord- ance with the requirements of this section. (b) Appraisal requirements (1) Physical property visit Subject to the rules prescribed under para- graph (4), an appraisal of property to be se- cured by a higher-risk mortgage does not meet the requirement of this section unless it is performed by a certified or licensed appraiser who conducts a physical property visit of the interior of the mortgaged property. (2) Second appraisal under certain cir- cumstances (A) In general If the purpose of a higher-risk mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at a price that was lower than the current sale price of the prop- erty, the creditor shall obtain a second ap- praisal from a different certified or licensed appraiser. The second appraisal shall include an analysis of the difference in sale prices, changes in market conditions, and any im- provements made to the property between the date of the previous sale and the current sale. (B) No cost to applicant The cost of any second appraisal required under subparagraph (A) may not be charged to the applicant.