FEDERAL RESERVE SYSTEM

12 CFR Part 202

[Regulation B; Docket No. RÄ0782]

Equal Credit Opportunity; Appraisals and Enforcement

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

SUMMARY: The Board is adopting a final rule revising Regulation B to implement
amendments to the Equal Credit Opportunity Act contained in the Federal
Deposit Insurance Corporation Improvement Act of 1991. The law provides credit
applicants with a right to receive copies of appraisal reports. Regulation B
is amended to provide alternative methods of compliance with the law.
Creditors may automatically provide a copy of an appraisal report to all
applicants for certain dwelling-secured loans, or they may provide a copy upon
the applicant's request (subject to other provisions in the final rule). For
creditors that do not automatically provide copies of appraisal reports, the
regulation includes limits on when an applicant may request (and a creditor
must provide) a copy of an appraisal report, and a requirement that applicants
be notified of the right to receive a copy. The final rule applies to
applications for credit to be secured by a lien on a residential structure
containing one-to-four family units.

DATES: Effective date. December 14, 1993.

Compliance date. Compliance is optional until June 14, 1994.

FOR FURTHER INFORMATION CONTACT: Michael Bylsma, Senior Attorney, or Jane
Ahrens, Jane Gell or Mary Jane Seebach, Staff Attorneys, at (202) 452Ä3667;
for the hearing impaired only, contact Dorothea Thompson, Telecommunications
Device for the Deaf (TDD), at (202) 452Ä3544, Board of Governors of the
Federal Reserve System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

(1) Background

The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691Ä1691f, makes it
unlawful for creditors to discriminate in any aspect of a credit transaction
on the basis of gender, marital status, race, national origin, color,
religion, age (provided the applicant has the capacity to contract), because
all or part of an applicant's income derives from any public assistance, or
because an applicant has in good faith exercised any right under the Consumer
Credit Protection Act, 15 U.S.C. 1601 et seq. The ECOA also provides that a
credit applicant has the right to obtain a written statement of reasons for a
denial of credit. The Board is authorized to prescribe rules that in its
judgment are necessary or proper to effectuate the purposes of the ECOA, to
prevent circumvention or evasion of the act, or to facilitate or substantiate
compliance with the act. The act is implemented by the Board's Regulation B,
12 CFR part 202. A staff commentary to the regulation, 12 CFR part 202 Supp.
I, applies and interprets the requirements of Regulation B.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) was
enacted into law in December 1991 (Pub. L. 102Ä242, 105 Stat. 2236). Section
223 of the FDICIA contains amendments to the ECOA that took effect on the date
the law was enacted. The law requires creditors to furnish applicants, upon
written request, with a copy of an appraisal report used in connection with an
application for a loan secured by residential real property. The law provides
that creditors may require the applicant to reimburse the creditor for the
cost of the appraisal. The law also expands the enforcement activities of the
federal financial supervisory agencies when information about possible
violations of the ECOA becomes known. The law specifies when the Department of
Justice (DOJ) must be contacted regarding suspected violations of the ECOA,
and when the Department of Housing and Urban Development (HUD) must be
notified of suspected violations of the ECOA that may also be violations of
the Fair Housing Act (FHA).

On December 7, 1992, the Board published a proposed rule to implement the
FDICIA amendments to the ECOA (57 FR 57697). The Board received nearly 240
comment letters on the proposal, mostly from institutions that would be
covered by the regulation. A number of commenters raised concerns about the
burden and costs the new requirements would impose. Many commenters raised
specific questions about various provisions in the proposal. The Board has
responded to many of those concerns by adopting both substantive and technical
changes to the proposal.

      A creditor's duty to provide appraisals upon request began on December
19, 1991. Creditors must begin complying with the regulation's requirements on
June 6, 1994, which allows institutions to familiarize themselves with the
rule, prepare disclosures, and train personnel.

(2) Regulatory Provisions

Right to Appraisal Report

Section 701(e) of the ECOA requires a creditor promptly to furnish an
applicant, upon a written request made within a reasonable period of time of
the application, a copy of the appraisal report used in connection with a loan
that is or would have been secured by a lien on residential real property. The
Board proposed to implement the appraisal provision by defining the scope of
residential real property; imposing time limitations for applicants to request
copies of appraisals and for creditors to provide copies; and requiring
creditors to provide a written notice to credit applicants of their right to
obtain copies of appraisal reports upon written request. These rules were
proposed to minimize the potential for civil liability (due to the uncertainty
of the scope of the law) and to aid uniform and objective assessments of
creditors' compliance with the ECOA in an examination by federal enforcement
agencies.

In addition to soliciting comment on the specific provisions of the proposal,
the Board solicited comment on two alternative approaches to implementing the
ECOA appraisal provision: (1) Incorporating the text of section 701(e) into
Regulation B without elaboration, or (2) interpreting and defining only a few
key terms found in section 701(e) (such as the scope of the law) in the
regulation.

Of the 240 commenters, approximately a dozen favored adopting only the
statutory text or not incorporating the statutory provision into the
regulation at all, suggesting that self-regulation would be adequate to ensure
compliance. Most commenters favored defining and interpreting terms in the
regulation. Most commenters also made specific suggestions and raised
questions about the proposed regulation.

The commenters favoring precise rules (including financial institutions and
community representatives) argued that it would help creditors by clarifying
how to comply with the amendments, and help credit applicants by ensuring that
they are treated consistently, regardless of the creditor from whom they seek
credit.

The Board believes, in light of the volume and variety of issues raised in
comments regarding the scope of coverage, timing, and other statutory terms,
that merely incorporating the text of section 701(e) could produce widely
inconsistent approaches by creditors (and even regulators) to compliance with
the law. For example, some industry commenters suggested that "residential
real property'' could be interpreted to include only one- to four-unit
dwellings, while others thought the term could be interpreted to include all
dwellings.

      Based on the comments received and upon further analysis, the Board is
adopting a rule that defines and interprets the key terms and text of section
701(e) of the ECOA. The Board believes a consistent understanding among
creditors and consumers alike about the law, including which loans trigger the
duty to provide appraisal reports and what information comprises an appraisal
report, will ease compliance, avoid conflict and potential liability, and
effectuate the purposes of the ECOA.

Section 202.5a Rules on Providing Appraisal Reports

Scope of coverage. Section 701(e) of the ECOA provides that the right to
obtain a copy of an appraisal report applies to an application for credit that
is or would have been secured by a lien on residential real property. The term
"residential real property'' is not defined in the statute. In the proposed
rule, the Board defined the scope of coverage to be credit applications,
regardless of their purpose (whether business or consumer purpose), that are
to be secured by a dwelling. A "dwelling'' was defined as a one- to four-unit
residential structure. The proposed coverage included loans to be secured by
mobile homes and individual cooperative units, whether or not such dwellings
are considered real property under state law, and excluded loans to be secured
by land only. Coverage would not have been limited to first-lien transactions.

In response to the comments received and upon further analysis, the Board is
adopting the scope of coverage as proposed. The definition of dwelling that
was included in the proposal has been adopted. The definition includes mobile
homes and individual cooperative units, whether or not they are considered
real property under state law, to ensure that the coverage of residential
appraisals is not limited by property classification. The Board notes that
this definition is consistent with the definition of dwelling contained in 
202.13(a).

In general, most commenters supported the proposed rule's coverage of
dwellings containing one to four units and opposed any broadening beyond that.
Several commenters supported expanding the coverage of the regulation to
include all dwellings, no matter how many units a dwelling comprises. They
stated that discriminatory practices in residential appraisals can include
"underappraising'' a multifamily building based on the characteristics of the
residents of the building or of the neighborhood in which it is located.1

®1¯ Some commenters referred to a recent settlement of litigation (Green v.
Avenue Bank of Oak Park), approved by a federal district court in Illinois, as
an indication that credit on multifamily properties could be denied based on
redlining and underappraisals. This lawsuit involved allegations that a loan
officer's assessment of the value of a multifamily property based on his
perceptions about conditions in the low-income neighborhood where it was
located was used to deny a mortgage application, although no formal appraisal
was made.

The Board believes that extending the coverage of the appraisal requirements
to include multifamily dwellings could impose a significant burden on
institutions which could outweigh the benefits to consumers. Such coverage,
for example, would extend the right to receive a copy of an appraisal report
to developers of multifamily properties, who generally were not identified by
the Congress as experiencing lending discrimination through the appraisal
process or as having difficulty in receiving copies of appraisals.

Nevertheless, while the final rule does not cover multifamily dwellings,
creditors are reminded that the rules prohibiting discrimination under
Regulation B are applicable to transactions involving multifamily dwellings
(as are the provisions of the Fair Housing Act). For example, the regulation
prohibits a creditor from denying an application for credit to be secured by
an apartment building based on the race or national origin of the applicant,
or of the tenants in the building (or the neighborhood in which it is
located). Furthermore, the Board will monitor complaints and information
obtained through the examination process about loan denials in connection with
multifamily properties. If the Board has reason to believe that applicants for
multifamily loans are not receiving copies of appraisal reports upon request
(or are experiencing discrimination), it may consider broadening the coverage
of  202.5a.

Some commenters opposed the coverage of transactions secured by a consumer's
dwelling that are for a business purpose, such as loans to start a small
business. These commenters discussed the potential difficulty in training
commercial loan staff to comply with the new requirements, particularly if a
notice is required to be given to all applicants. The statute does not exempt
applications for business loans secured by residential real property from the
right to obtain a copy of an appraisal report, and nothing in the legislative
history suggests that coverage should be so limited. Further, business-purpose
loans presently are subject to Regulation B and its requirements to provide
notices about the action taken on an application. Therefore, the Board
believes that the requirements of  202.5a can be readily incorporated into
existing procedures particularly since, as described below, the notice
requirement for appraisal reports may be incorporated into other commonly used
documents or required notices. The burden on institutions by extending the
right to receive a copy of an appraisal report to both consumer- and
business-purpose loans secured by a dwelling will be minimized in the final
rule, because multifamily dwellings are not covered.

Definition of appraisal report. The statute does not define an appraisal
report; however, the legislative history suggests that it is the complete
appraisal report signed by the appraiser, including all information submitted
to the lender by the appraiser for the purpose of determining the value of
residential property. The proposed definition was based on the legislative
history, and stated that an appraisal report referred to the documents relied
upon by a creditor in evaluating the market value of residential property
containing one-to-four family units on which a lien will be taken as
collateral for an extension of credit, including reports prepared by the
creditor. The proposal stated that an appraisal report would not be limited to
reports prepared by third parties.

      The final rule provides the same meaning for an appraisal report as was
proposed, but the definition has been shortened for clarity. A consumer who
requests a copy of the appraisal report will be entitled to receive a copy of
any third party appraisal that has been performed. For consistency with the
rules implementing the prohibitions of the Fair Housing Act on discrimination
in appraising residential real property, an appraisal report includes all
written comments and other documents submitted to the creditor in support of
the appraiser's estimate or opinion of value. (See 24 CFR 100.135(b).)

The "appraisal report'' does not include copies of "review appraisals,''
agency-issued statements of appraised value, or any internal documents if a
third party appraisal report was used to establish the value of the security.
Even when a third party appraisal has been performed, however, a consumer
requesting a copy of the report also must receive a copy of documents that
reflect the creditor's valuation of the dwelling when that valuation is
different from that stated in the third party appraisal report. Such documents
would include staff appraisals or other notes indicating why the value
assigned by the third party appraiser is not the appropriate valuation.

The right to receive a copy of an appraisal report provided under Regulation B
includes, but is not limited to, transactions in which appraisals by a
licensed or certified appraiser are required by federal law. If the value of
the dwelling has been determined by the creditor and a third party appraiser
has not been used, the appraisal report would be the report of the creditor's
staff appraiser, where applicable, or the other documents of the creditor
which assign value to the dwelling.

Alternative Means of Compliance

1. Paragraph (a)(1) Routine Delivery

The proposal provided that creditors routinely giving copies of appraisal
reports to all applicants, whether credit is granted or denied, would not be
subject to the proposed timing requirements for providing an applicant with a
notice of the right to receive a copy of an appraisal report. However, the
proposal also provided that such creditors would remain subject to the
proposed timing rules for responding to a written request for a report, if the
request was made prior to the time the creditor routinely provided it.

In response to comments received and upon further analysis, the Board is
adopting a final rule that differs from the proposal. Paragraph (a)(1) of the
final rule provides that a creditor may comply with the law by routinely
giving each applicant a copy of the appraisal report (whether credit is
granted or denied or the application is withdrawn). Creditors that routinely
provide copies when the appraisal is completed, or later in the application
process (for example, when notice is given of action taken on the
application), will be in compliance with the regulation. A creditor complying
with the law pursuant to paragraph (a)(1) is exempt from the requirements of
paragraph (a)(2), the notice and timing rules. The Board believes this
approach will provide consumer benefits, simplify the regulation, and
substantially ease the compliance burden for creditors.

2. Paragraph (a)(2) Upon Request

The requirements are more detailed for creditors who provide a copy of an
appraisal report only upon the written request of the applicant:

Time when requests must be made. The law provides that an applicant must make
a request "within a reasonable period of time of the application.'' The
legislative history states that a reasonable period of time depends on a
balancing of factors, such as how long lenders routinely maintain loan files
and how long a loan applicant might need to identify and act upon suspected
discrimination.

The Board proposed that applicants must make written requests for an appraisal
report no later than 90 days after receiving the notice from the creditor. The
Board's proposal noted that the 90-day period for requesting an appraisal
report could be viewed as too short, given the regulation's requirements for
keeping records and the statute of limitations for filing an ECOA lawsuit.2
The Board stated the belief that the proposed 90-day time limit would
reasonably tie the period in which an appraisal report must be requested close
to the period in which the applicant would be likely to request it, and in
which the creditor likely would still have the files "on site.''

®2¯ An aggrieved applicant may file suit for an alleged ECOA violation up to
two years from the date of the alleged violation. Furthermore, under  202.12
of Regulation B, creditors are required to maintain loan files for up to 25
months (12 months for business credit) from the time they provide the
applicant with a notice of the action taken on the application or a notice of
incompleteness, as provided in  202.9.

      Most commenters supported the proposed 90-day period, stating that it
was a reasonable interpretation of the statute, which did not specify any
period. Some commenters recommended that requests be required to be made in a
shorter period of time, such as within 30 to 60 days of the date the consumer
receives the notice of action taken on the application. The commenters argued
that files may not be maintained in the creditor's office for 90 days, for
example, if the loan is to be sold or if the files are transferred to another
location. Some of the commenters questioned whether the valuation contained in
the appraisal would have a similarly short "useful life'' when market
conditions cause property values to change frequently.

Other commenters opposed the proposal and urged the adoption of a time period
for appraisal requests that is uniform with the 25-month record retention
requirements in  202.12 (12 months for business loans). These commenters
believed that such a requirement would not impose a much greater burden than
already exists since the appraisal must be maintained with the other records
used in evaluating the application. Additionally, some commenters noted that a
shorter time period for requesting appraisal reports than for retaining
records could mean that appraisal reports could only be obtained through
litigation, unless the institution voluntarily provided the report after that
time.

Based on the comments and its analysis, the Board is adopting the 90-day time
period that was proposed. The statutory language indicates an expectation that
the period for requests should be reasonably close in time to the application.
The 90-day rule should provide applicants the right to request a copy of the
appraisal report during the time they are most likely to be interested in
receiving it around the time the application has been made and the appraisal
has been conducted and paid for. A 90-day period also should not present
significant compliance difficulties, especially since the final rule provides
greater flexibility in how soon the report must be provided following a
request.

Time when appraisal reports must be provided. The law also states that a
creditor must "promptly'' furnish a copy of the appraisal report. The Board
proposed requiring the creditor to provide a copy of the report within 15 days
of receiving a written request or within 15 days of obtaining an appraisal
report, whichever occurs later. While many commenters on this provision
thought that the 15-day period was a reasonable interpretation of the statute,
many other commenters recommended a longer period (with most suggesting a
30-day period). These commenters believed a longer time was necessary for
lenders who do not maintain loan files in their office. After consideration of
the public comments, the Board has revised the proposal to provide greater
flexibility in the final rule. The regulation does not set a specific time by
which an appraisal report must be provided. Instead, the regulation requires
creditors to provide copies of appraisal reports "promptly,'' which it states
will be 30 days, but which may be longer in exceptional circumstances.

Some commenters requested that the Board clarify that the timing rule apply
only after the latest of three events: the request, receipt of the appraisal
by the lender, and the applicant's reimbursement of the creditor for the cost
of the appraisal. The Board agrees that this is the appropriate way to measure
the time after which the creditor must "promptly'' provide a copy of the
report, and the final rule clarifies this.

Notice of Right to Copy of Appraisal

The amendments to ECOA do not specify that creditors shall notify applicants
of their right to receive a copy of the appraisal report. The Board proposed
that applicants for credit to be secured by a dwelling should be provided a
written notice of their right to receive a copy of the appraisal report. This
notice generally was to be given no later than 15 days after the creditor
received the application. In proposing the notice requirement, the Board noted
the Congress's belief that access to appraisal reports might help in detecting
credit discrimination associated with the appraisal of property. The Board
also noted that the notice would be particularly important to applicants if
there has been a lender practice of not making appraisals available to
applicants.

Most commenters opposed the proposed notice requirement because of the
additional paperwork burden that it would impose and the fact that the
Congress did not require it. Some commenters opposed the notice requirement on
the general grounds that the cumulative effect of disclosure rules is to
overburden the industry. At the other end of the spectrum, a few commenters
including a state consumer protection agency recommended that the final
regulations require notification to all applicants and a second notice to
applicants whose loans are denied.

      While the notice would impose some burden, the Board believes that it is
outweighed by the consumer benefit from receiving the notice. If the
notification were to be included on notices of action taken on a consumer's
loan application (required by Regulation B), Truth in Lending disclosures, or
on application or other forms (instead of creating a separate disclosure), the
compliance costs would be limited to the one-time incremental cost of revising
documents to add the notice.

After review of the public comments, the Board believes greater effect to the
ECOA appraisal amendments is achieved by requiring that applicants be notified
of their right to a copy of the appraisal report, as proposed. In the Board's
view, it is important that this minimal notice be given to applicants in light
of the Congress's concern about potential discrimination in the appraisal
process. It is also important to notify all consumers of their statutory right
to a copy of their appraisal, given the anecdotal evidence (confirmed by the
commenters) that appraisals previously were not made available to applicants
upon request.3 Therefore, pursuant to the Board's authority in section 703 of
the ECOA, creditors will be required to provide all applicants with written
notice of the right to receive a copy of the appraisal report. As stated
above, the notice need not be given by creditors who automatically provide
copies to all applicants. To reduce the potential paperwork burden of the
notice requirement, the Board will not require that the notice be provided in
a form the consumer can keep, as was proposed. Furthermore, in response to
commenters' suggestions for flexibility on timing, the rule would permit
creditors to provide this notice as early as the time of application. They may
also provide the notice later, but not later than at the time they notify an
applicant of the action they have taken on the application. (Under  202.9 of
the regulation, creditors must notify applicants of their approval of,
counteroffer to, or adverse action on an application within 30 days of receipt
of a completed application.) The notice may be included on or with the adverse
action notice, the application, or other documents.

®3¯ In the proposal, the Board asked creditors whether they currently provided
appraisal reports automatically. Nearly 30 commenters addressed the issue.
About ten of those stated they routinely provide appraisal reports to
consumers.

Reimbursement. The statute permits a creditor to require reimbursement from
the applicant for the cost of the appraisal before a copy is provided. Many
commenters responded to the Board's request for information about the fees
that may be charged for a copy of an appraisal. Most commenters that addressed
the issue stated that all or part of the cost of having the appraisal
conducted is imposed on the applicant. According to several commenters, no
other fees are imposed for providing a copy of the appraisal report. Many
commenters who charge consumers for having the appraisal performed asked the
Board to clarify whether fees for providing a copy of the appraisal (for
example, copying fees and postage) could be imposed following the adoption of
the final rule.

The statute permits the creditor to be reimbursed for the cost of the
appraisal and the final rule reflects that. This provision permits a creditor
to require the consumer to pay for the cost of the appraisal prior to
providing a copy. "Reimbursement'' would not be allowed as a condition for
providing a copy of the appraisal if the fee has already been paid by the
consumer for example, as part of the application fee.

The final rule also permits the creditor to require reimbursement of photocopy
and postage costs that are incurred in providing the copy of the report,
unless prohibited by state or other law.

Paragraph (b) Credit Unions

      The proposal excepted from the requirements creditors that provide
appraisal reports pursuant to NCUA regulations, in keeping with the
legislative history to the ECOA amendments. (See S. Rep. No. 167 at 90.) The
final rule exempts credit unions from the provisions of  202.5a if they are
subject to, and comply with, the provisions of the NCUA regulations relating
to making appraisals available upon request. 12 CFR 701.31(c)(5).

Section 202.14 Enforcement, Penalties, and Liabilities

Paragraph (b) Penalties and Liabilities

The Board proposed that changes made to section 706 of the ECOA by FDICIA be
incorporated into Regulation B. The language of the final rule differs
slightly from the proposed text for clarity, but the meaning is unchanged;
federal financial supervisory agencies must refer suspected pattern and
practice discrimination cases to the DOJ. In addition, the agencies must
notify HUD when they have reason to believe violations of the ECOA have
occurred that may also constitute violations of the FHA, unless the matter has
been referred to the DOJ.

Appendix C Sample Disclosure Forms

A sample disclosure notice, Form CÄ9, has been added to Appendix C. Proper use
of this form satisfies compliance with  202.5a of Regulation B. Creditors may
design their own form, or add to or modify the model form, to reflect their
individual policies and procedures. For example, if a creditor wants to give
applicants the option to call and leave their name and the address to which an
appraisal report should be sent, the creditor may modify the notice
accordingly. The reference in the proposed model form to telephone requests
for a copy of the appraisal report has been deleted, however, to respond to
comments expressing concern that it could be viewed as requiring telephone
requests to be honored. In addition, for brevity, the model form has been
revised to eliminate the reference to reimbursing creditors for the cost of
the appraisal and copies of the report (although such a reference may be
included with the notice).

(3) Economic Impact Statement

The Board's Division of Research and Statistics has prepared an economic
impact statement on the proposed revisions to Regulation B. A copy of the
analysis may be obtained from Publications Services, Board of Governors of the
Federal Reserve System, Washington, DC 20551, at (202) 452Ä3245.

(4) Paperwork Reduction Act

In accordance with section 3507 of the Paperwork Reduction Act of 1980 (44
U.S.C. 35; 5 CFR 1320.13), the proposed information collection was reviewed by
the Board under the authority delegated to it by the Office of Management and
Budget after considering comments received during the public comment period.

A number of commenters believed that complying with the proposal would place
significant paperwork burdens on institutions, particularly small
institutions. Some expressed concern about the volume and variety of
disclosures provided to consumers for credit transactions secured by
residential real property, and the potential for consumer confusion.

A few commenters reacted to the specific burden estimates that appeared in the
proposal. They believed that the estimates underreported the burden,
particularly the time associated with responding to requests for copies of
appraisal reports. The commenters questioned whether institutions typically
could retrieve and review files, then copy and send appraisal reports in 5
minutes, as proposed.

In response to these comments, the Board has adjusted the burden estimates
that were made in the proposal by increasing the estimated time needed to
respond to requests for appraisal reports.

The requirements will apply to both large and small mortgage lenders. The
impact on small creditors will depend upon whether lenders provide appraisals
as a matter of course. The model disclosure form in the regulation will
somewhat ease compliance burdens on the lenders. In addition, lenders that
regularly provide appraisal reports to applicants (whether the loan is
approved or denied) need not comply with the notice requirement of the
regulation.

The following information about paperwork burden relates only to the effect of
the proposal on state member banks of the Federal Reserve System. Lenders that
are subject to Regulation B other than state member banks are supervised by
other Federal agencies. For purposes of the Paperwork Reduction Act, these
agencies will report their own estimates of the paperwork burden imposed by
the new ECOA requirement.

The Board estimates that the disclosure requirement will result in an annual
reporting burden of about 23,000 hours for state member banks.

Proposed Information Collection

Report title: Recordkeeping and Disclosure Requirements in Connection with
Regulation B (Equal Credit Opportunity)

Report number: Not applicable

OMB docket number: 7100Ä0201

Frequency: As needed

Reporters: State member banks

c6,L1,tp0,i1,s150,12,xls10,12,xls10,12

 [col head 1]   [col head 1] Number of records subject to requirement [col
head 1] x [col head 1] Estimated time per response (minutes) [col head 1] =
[col head 1] Estimated total number of hours of annual reporting burden

Appraisal report upon request 	125,000 	 	10 	 	20,800

Notice of right to appraisal 	625,000 	 	.25 	 	2,600

List of Subjects in 12 CFR Part 202

Aged, Banks, Banking, Civil rights, Credit, Marital status discrimination,
Penalties, Religious discrimination, Reporting and recordkeeping requirements,
Sex discrimination.

      For the reasons set forth in the preamble, and pursuant to authority
granted in 15 U.S.C. 1691b of the ECOA, the Board amends 12 CFR part 202 as
follows:

PART 202 EQUAL CREDIT OPPORTUNITY (REGULATION B)

The authority citation for part 202 continues to read as follows:

Authority: 15 U.S.C. 1691Ä1691f.

2. Section 202.1 is amended by revising the last sentence of paragraph (b) to
read as follows:

 202.1 Authority, scope, and purpose.

                                  * * * * *

(b) * * * The regulation also requires creditors to notify applicants of
action taken on their applications; to report credit history in the names of
both spouses on an account; to retain records of credit applications; to
collect information about the applicant's race and other personal
characteristics in applications for certain dwelling-related loans; and to
provide applicants with copies of appraisal reports used in connection with
credit transactions.

3. Section 202.5a is added to read as follows:

 202.5a Rules on providing appraisal reports.

(a) Providing appraisals. A creditor shall provide a copy of the appraisal
report used in connection with an application for credit that is to be secured
by a lien on a dwelling. A creditor shall comply with either paragraph (a)(1)
or (a)(2) of this section.

(1) Routine delivery. A creditor may routinely provide a copy of the appraisal
report to an applicant (whether credit is granted or denied or the application
is withdrawn).

(2) Upon request. A creditor that does not routinely provide appraisal reports
shall provide a copy upon an applicant's written request.

(i) Notice. A creditor that provides appraisal reports only upon request shall
notify an applicant in writing of the right to receive a copy of an appraisal
report. The notice may be given at any time during the application process but
no later than when the creditor provides notice of action taken under  202.9
of this part. The notice shall specify that the applicant's request must be in
writing, give the creditor's mailing address, and state the time for making
the request as provided in paragraph (a)(2)(ii) of this section.

(ii) Delivery. A creditor shall mail or deliver a copy of the appraisal report
promptly (generally within 30 days) after the creditor receives an applicant's
request, receives the report, or receives reimbursement from the applicant for
the report, whichever is last to occur. A creditor need not provide a copy
when the applicant's request is received more than 90 days after the creditor
has provided notice of action taken on the application under  202.9 of this
part or 90 days after the application is withdrawn.

      (b) Credit unions. A creditor that is subject to the regulations of the
National Credit Union Administration on making copies of appraisals available
is not subject to this section.

(c) Definitions. For purposes of paragraph (a) of this section, the term
dwelling means a residential structure that contains one to four units whether
or not that structure is attached to real property. The term includes, but is
not limited to, an individual condominium or cooperative unit, and a mobile or
other manufactured home. The term appraisal report means the document(s)
relied upon by a creditor in evaluating the value of the dwelling.

4. Section 202.14 is amended by revising paragraph (b)(3) and by adding
paragraphs (b)(4) and (b)(5) to read as follows:

 202.14 Enforcement, penalties and liabilities.

                                  * * * * *

(b) Penalties and liabilities. * * *

                                  * * * * *

(3) If an agency responsible for administrative enforcement is unable to
obtain compliance with the act or this part, it may refer the matter to the
Attorney General of the United States. In addition, if the Board, the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, the
Office of Thrift Supervision, or the National Credit Union Administration has
reason to believe that one or more creditors engaged in a pattern or practice
of discouraging or denying applications in violation of the act or this part,
the agency shall refer the matter to the Attorney General. Furthermore, the
agency may refer a matter to the Attorney General if the agency has reason to
believe that one or more creditors violated section 701(a) of the act.

(4) On referral, or whenever the Attorney General has reason to believe that
one or more creditors engaged in a pattern or practice in violation of the act
or this regulation, the Attorney General may bring a civil action for such
relief as may be appropriate, including actual and punitive damages and
injunctive relief.

(5) If the Board, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, or the National
Credit Union Administration has reason to believe (as a result of a consumer
complaint, conducting a consumer compliance examination, or otherwise) that a
violation of the act or this part has occurred which is also a violation of
the Fair Housing Act, and the matter is not referred to the Attorney General,
the agency shall notify:

(i) The Secretary of Housing and Urban Development; and

(ii) The applicant that the Secretary of Housing and Urban Development has
been notified and that remedies for the violation may be available under the
Fair Housing Act.

                                  * * * * *

5. Appendix C to Part 202 is amended in the first paragraph of the
introduction by revising the first sentence and adding a sentence at the end;
in the last paragraph of the introduction by adding a sentence at the end; and
by adding sample Form CÄ9 to read as follows:

Appendix C to Part 202 Sample Notification Forms

This appendix contains nine sample notification forms. * * * Form CÄ9 is
designed for use in notifying an applicant of the right to receive a copy of
an appraisal under  202.5a.

                                  * * * * *

* * * Proper use of Form CÄ9 will satisfy the requirements of  202.5a of this
part.

                                  * * * * *

Form CÄ9 Sample Disclosure of Right to Receive a Copy of an Appraisal

You have the right to a copy of the appraisal report used in connection with
your application for credit. If you wish a copy, please write to us at the
mailing address we have provided. We must hear from you no later than 90 days
after we notify you about the action taken on your credit application or you
withdraw your application.

[In your letter, give us the following information:]

By order of the Board of Governors of the Federal Reserve System, December 9,
1993.

William W. Wiles,

Secretary of the Board.

[FR Doc. 93Ä30536 Filed 12Ä15Ä93; 8:45 am]

BILLING CODE 6210Ä01ÄP