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Does the borrower have a right to a copy of a commercial appraisal?

Discussion in 'General Appraisal Discussion' started by Dan Green, May 12, 2006.

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  1. Dan Green

    Dan Green New Member

    0
    Dec 14, 2005
    Professional Status:
    Certified General Appraiser
    I am trying to find out if there are federal statutes that require lenders to provide a copy of a commercial appraisal to the borrower. I know there are such requirements with regard to residential appraisals, but have not seen it addressed for the commercial end.
     
  2. Dennis J. Black ASA IFAS

    Dennis J. Black ASA IFAS Senior Member

    0
    Mar 5, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Fair Credit Act

    It falls under the Fair Credit Act. Anytime someone (even a corporation) applies for credit they are entitled to those documents which the lender relied upon to make the decision.
     
  3. Tony V

    Tony V Elite Member

    27
    Mar 29, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Dennis....don't they still have to go through the lender to get a copy???
     
  4. Chris Harrison

    Chris Harrison Senior Member

    0
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Utah
    Good question! Since the act only mentions residential mortgage it would be a question I would seek legal counsel for with an attorney that deals with commercial lending.

    "Under 12 U.S.C.A. Section 169 (e), part of the Federal Equal Credit Opportunity Act, a residential mortgage applicant has the right to receive a copy of the appraisal report from the lender. To receive the copy of the appraisal report, the borrower must request it in writing from the lender within ninety days of submitting the loan application. The December, 1991 amendments to the Federal Equal Credit Opportunity Act, known as 12 USCA Section 169 (e), require a lender to provide, on written request, a copy of the appraisal report to any person who applies for a residential mortgage."
     
  5. Paul Ness MAI

    Paul Ness MAI Member

    0
    Jan 14, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    During nine years as a commercial appraisal officer, I operated under the premise that only resi appraisals were required by law to be provided, not commercial. However, if they pay for it, it's only fair they get a copy. Why shouldn't they? If they didn't pay for it they certainly have no right to it. What is the reason for your question?
     
  6. Joker

    Joker Elite Member

    0
    May 28, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Ohio
    My lender clients have informed me that they don't have to provide copies to the borrowers. In fact, they rarely do. Once in a while they will make a copy of the cover letter/letter of transmittal but it is rare that they copy the entire report and provide it to the borrower. I do, however, have one client that requires 4 original reports, one of which goes to the borrower.I am more in support of providing copies of commercial reports to borrowers than providing copies of residential reports to borrowers. Owners of commercial properties are often more astute than joe six pack who owns a $40,000 doublewide.
     
  7. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    253
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    More astute?

    well...maybe. I sure kill a lot of deals though.
     
  8. Dan Green

    Dan Green New Member

    0
    Dec 14, 2005
    Professional Status:
    Certified General Appraiser
    Reason for the question.

    I have a mortgage broker client that deals with commercial work through a third party lender. They have had difficulty with the appraisers provided with regard to turn around time and excessive fee (by the way appraised value is not the concern and in fact a fairly large percentage of the appraisals I provide him are considerably lower then the purchase price. He has never asked me to change a value or even argued the appraised value). The client believes that the appraisers are being chosen based upon a possible kick back to the person ordering the appraisals, as service and fee do not seem to factor into it. Since this is not illegal, but does need to be reported on the appraisal he was hoping to have his borrowers check to see if there is any mention on it in the appraisal. However, despite the borrowers paying the appraisal fee they never get a copy of it.
     
  9. moh malekpour

    moh malekpour Elite Member

    0
    May 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Why there should be any different between commercial and residential borrowers with respect to appraisal copy entitlement? Isn’t it a kind of discrimination?
     
    Last edited: May 12, 2006
  10. Howard Klahr

    Howard Klahr Senior Member

    80
    Oct 4, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    It is called consumer protection laws. Commercial borrowers are presumed under the law to be more sophisticated and knowledgeable and therefore do not require the same protections as consumers. Same is usually true for Landlord/Tenant laws and Purchase Contracts.

    Although back in my lender days we did usually provide the commercial borrowers with copies of third-party reports (Appraisals, Engineering and Environmental inspections), the reports were often not provided until after closing or denial of the deal.

    In regards to the argument that the borrower pays for the report and is therefore entitled to a copy, what about the lenders underwriting documents. Most loans have origination fees of some type that are paid by the borrower that cover the cost of underwriting performed by the lender. Does that mean that the borrower is entitled to this information also?
     
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