A LOOK AT THE CONSUMER FINANCIAL PROTECTION BUREAU’S ECOA "DISCLOSURE AND DELIVERY" VALUATIONS RULE

Sanford Shatz¹

Sanford Shatz Sanford Shatz is Of Counsel to McGlinchey Stafford’s Irvine, CA office where he specializes in commercial and mortgage-related litigation and compliance issues. He is a member of the California State Bar’s Consumer Financial Services Committee and the Chair of the American Bar Association’s Housing Finance Subcommittee.

I. Introduction

When the mortgage crisis engulfed America, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"),² in part to ensure transparent lending to informed consumers. Borrowers who had applied for loans to be secured by their homes did not know if the appraisal process played a fair role in the consideration of their loan terms. Because borrowers could not review the appraisal of their home until after the completion of the transaction, they could not determine whether either the appraiser or the creditor had employed discriminatory means, considered discriminatory factors, or otherwise violated their right to equal protection in connection with the origination of their loan. As part of the Dodd-Frank Act, Congress amended the Equal Credit Opportunity Act³ ("ECOA") to require creditors to inform borrowers of their right to receive a copy of any appraisal or other written valuation used in evaluating their credit application and to provide borrowers with earlier access to those written valuations.⁴ This amendment was intended to help borrowers uncover invidious discrimination in the preparation of property valuations used for loan origination or loss mitigation purposes.