1.This Act may be cited as the Fair
Value and Independent Appraisal Act
.
2.Property appraisal
requirements
(a)Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by adding at the end the
following new subsection:
(m)Property
appraisal requirements
(1)A creditor may not extend credit in the form of a
mortgage referred to in section 103(aa) to any consumer, without first
obtaining a written appraisal of the property to be mortgaged, prepared in
accordance with the requirements of this subsection.
(2)
(A)An appraisal of property to be secured by a
mortgage referred to in section 103(aa) does not meet the requirements of this
subsection unless it is performed by a qualified appraiser who conducts a
physical property visit of the interior of the mortgaged property.
(B)Second
appraisal under certain circumstances
(i)If the purpose of a mortgage referred to in section
103(aa) is to finance the purchase or acquisition of the mortgaged property
from a person within 180 days of the date of purchase or acquisition of such
property by that person at a price that was lower than the current sale price
of the property, the creditor shall obtain a second appraisal from a different
qualified appraiser. The second appraisal shall include an analysis of the
difference in sale prices, changes in market conditions, and any improvements
made to the property between the date of the previous sale and the current
sale.
(ii)The cost of any second appraisal required under clause
(i) may not be charged to the consumer.
(C)Qualified
appraiser definedFor purposes of this subsection, the term
qualified appraiser means a person who—
(i)is certified or
licensed by the State in which the property to be appraised is located;
and
(ii)performs each
appraisal in conformity with the Uniform Standards of Professional Appraisal
Practice and title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and the regulations prescribed under such title, as in
effect on the date of the appraisal.
(3)A creditor shall provide 1 copy of each appraisal
conducted in accordance with this subsection in connection with a mortgage
referred to in section 103(aa) to the consumer without charge, at least 3 days
prior to the transaction closing date.
(4)At the time of the initial mortgage application, the
consumer shall be provided with a statement by the creditor that any appraisal
prepared for the mortgage is for the sole use of the creditor, and that the
consumer may choose to have a separate appraisal conducted at their own
expense.
(5)In
addition to any other liability to any person under this title, a creditor
found to have willfully failed to obtain an appraisal as required in this
subsection shall be liable to the consumer for the sum of
$2,000.
.
(b)Equal Credit
Opportunity Act amendmentSection 701(e) of the Equal Credit
Opportunity Act (15 U.S.C. 1691(e)) is amended to read as follows:
(e)Copies
furnished to applicants
(1)Each creditor shall furnish to an applicant, a copy of
all appraisal reports and valuations developed in connection with the
applicant’s application for a loan that is or would have been secured by a lien
on residential real property.
(2)Appraisal
reports shall be furnished under this subsection upon written request by the
applicant, made within a reasonable period of time of the application and
before closing.
(3)The
creditor may require the applicant to pay a reasonable fee for the provision of
copies of appraisal reports under this subsection.
(4)Notification to
consumersThe creditor shall notify (pursuant to regulations
prescribed by the Board) an applicant in writing of the right to receive a copy
of each appraisal report, under this
subsection.
.
(c)Unfair and
deceptive acts and practices relating to certain consumer credit
transactionsChapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129 the following new
section:
129A.Unfair and
deceptive acts and practices relating to certain consumer credit
transactions
(a)It shall be unlawful,
in providing any mortgage lending services for a consumer credit transaction
secured by the principal dwelling of the consumer or any mortgage brokerage
services for such a transaction, to engage in any unfair or deceptive act or
practice.
(b)For purposes of subsection (a), unfair and deceptive
acts or practices shall include—
(1)any appraisal of
a property offered as security 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 coerces, bribes, extorts, colludes,
or otherwise improperly influences a person conducting or involved in an
appraisal, or attempts to coerce, bribe, extort, collude, or otherwise
improperly influence 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 appraiser;
(2)mischaracterizing
or suborning any mischaracterization of, the appraised value of the property
securing the extension of credit;
(3)seeking to
influence an appraiser or otherwise to encourage a targeted value in order to
facilitate the making or pricing of the transaction; and
(4)failing to timely
compensate an appraiser for a completed appraisal, regardless of whether the
transaction closes.
(c)The
requirements of subsection (b) may not be construed as prohibiting a mortgage
lender, mortgage broker, mortgage banker, real estate broker, or any other
person with an interest in a real estate transaction from asking an appraiser
to correct errors in the appraisal report.
(d)The Board and the Federal Trade Commission—
(1)shall jointly
prescribe regulations defining with specificity acts or practices which are
unfair or deceptive in the provision of mortgage lending services for a
consumer credit transaction secured by the principal dwelling of the consumer
or mortgage brokerage services for such a transaction, within the meaning of
subsections (a), (b), and (c); and
(2)may jointly issue
interpretive guidelines and general statements of policy with respect to unfair
or deceptive acts or practices in the provision of mortgage lending services
for a consumer credit transaction secured by the principal dwelling of the
consumer and mortgage brokerage services for such a transaction, within the
meaning of subsections (a), (b), and (c).
(e)For
purposes of this section—
(1)the terms
mortgage brokerage services and mortgage lending
services, have the meanings given such terms in section 13(f) of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2611(f)); and
(2)the term
improperly influence means any attempt to manipulate, through
coercion, extortion, collusion, intimidation, non-payment for services
rendered, direct or indirect compensation, or bribery, the development,
reporting, result, or review of a property appraisal.
(f)
(1)In addition to the enforcement provisions referred to
in section 130, each person who violates this section shall forfeit and pay a
civil penalty of not more than $10,000 for each day during which any such
violation continues.
(2)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 subsequent violations.
(3)The
agency referred to in subsection (a) or (c) of section 108 with respect to any
person described in paragraph (1) shall assess any penalty under this
subsection to which such person is
subject.
.
(d)The table of sections for chapter 2 of the Truth in
Lending Act is amended by inserting after the item relating to section 129 the
following new item:
Sec. 129A. Unfair and deceptive practices and acts relating to
certain consumer credit
transactions.
.