Regulation B - ECOA Supporting Statement

CONSUMER FINANCIAL PROTECTION BUREAU
INFORMATION COLLECTION REQUEST – SUPPORTING STATEMENT
EQUAL CREDIT OPPORTUNITY ACT APPRAISAL PROPOSAL
(REGULATION B) 12 CFR 1002.14
(OMB CONTROL NUMBER: 3170-0013)
The Bureau of Consumer Financial Protection (CFPB or the Bureau) is providing a
supporting statement for proposed changes to Regulation B. This statement addresses the
information collection requirements in Regulation B that are affected by the CFPB’s proposed
change as described below. The title of this information collection is ECOA Appraisal Proposal.
A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
In response to the recent mortgage crisis, Congress amended the Equal Credit
Opportunity Act (ECOA) to require creditors to automatically provide mortgage applicants with
a copy of appraisal reports and valuations prepared in connection with an application for a loan to
be secured by a first lien on a dwelling. This change was enacted as part of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act), Pub. L. 111-203, 124 Stat. 1376,
§1474 (2010).
The CFPB is the agency responsible for rulemaking under ECOA (except with respect to
persons excluded from the Bureau’s rulemaking authority by section 1029 of the Dodd-Frank
Act). Regulation B is the implementing regulation for ECOA. 12 CFR Part 1002. The CFPB is
proposing to amend Regulation B and its Official Interpretations to implement the new statutory
requirement regarding appraisals and valuations.
The proposed rule requires creditors to provide certain appraisals and other valuations to
applicants. Under the proposed rule, copies of all appraisals and other valuations conducted in
connection with an application for a loan to be secured by a first lien must be furnished to
applicants free of charge. Copies of these materials must be furnished promptly (generally within
30 days of receipt by the creditor), but not later than three business days prior to consummation
of the transaction, whichever is first to occur. Copies of these materials may be provided in
electronic form, subject to compliance with the consumer consent and other applicable
provisions of the E-Sign Act, 15 U.S.C. §§ 7001 et seq. Currently, ECOA requires that copies be
provided only upon request. The proposed rule would ensure that consumers receive information
prior to closing about how the property’s value was determined.

2. Use of the Information
This information collection is required by statute. As discussed above, creditors will
furnish copies of appraisals and other valuations to applicants for credit to be secured by a first
lien on a dwelling. Disclosures are not submitted to the federal government.
The information collection requirements in the proposed rule would be the provision of
certain appraisals and other valuations to applicants. Under the proposed rule, copies of all
appraisals and other valuations conducted in connection with an application for a loan to be
secured by a first lien must be furnished to applicants free of charge. These copies may be
delivered by creditors to consumers physically or electronically.
3. Use of Information Technology
To reduce burden, the disclosure described above may be submitted to consumers
electronically subject to compliance with the consumer consent and other applicable provisions
of the E-Sign Act, 15 U.S.C. §§ 7001 et seq. Additionally, most disclosures are computer
generated. The CFPB expects that creditors will be able transmit the required copies to the loan
applicant either electronically or in hard copy.
4. Efforts to Identify Duplication
This information collection does duplicate, in part, two other Federal efforts.
Specifically, the information collection requirement duplicates in part the Truth in Lending Act
requirement to provide free copies of written appraisals for higher-risk mortgages. 15 U.S.C.
1639h. In addition, the requirement also duplicates in part the National Credit Union
Administration’s regulation requiring national credit unions to provide copies of appraisal reports
to loan applicants upon request. 12 CFR 701.31(c)(5). However, where duplicative requirements
apply, a creditor need only provide an applicant one copy of each written appraisal to comply
with all three requirements.
5. Efforts to Minimize Burdens on Small Entities
As noted in the CFPB’s proposed rule, currently, ECOA requires that copies be provided
upon request. The Bureau believes, based on its outreach, that currently it is routine business
practice for appraisals to be sent to consumers for all first lien transactions that result in an
origination and that copies of written appraisals and valuations conducted for applications that do
not result in a loan could be forwarded on to consumers by electronic means in many cases.
This should minimize burden by reducing the time and resources necessary to compile and
distribute the copies of written appraisals and valuations. The ongoing burden is at a per
application level.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
This information is not submitted to the federal government. These disclosures are

required by statute, 15 U.S.C. 1691(e). The burdens on respondents are the minimum necessary
to comply with the statute, and to assist borrowers in obtaining information about how the
property’s value was determined by the creditor.
7. Circumstances Requiring Special Information Collection
Information is not reported to the CFPB. The proposed collection of information in
Regulation B is consistent with the applicable guidelines contained in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
The CFPB published a notice of proposed rulemaking in the Federal Register for public
comment. The comment period for the Paperwork Reduction Act analysis will expire on October
22, 2012. Prior to issuing the proposed rule, the CFPB consulted with other Federal agencies
consistent with section 1022 of the Dodd-Frank Act.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
There are no assurances of confidentiality provided to respondents.
11. Justification for Sensitive Questions
This information collection does not include questions of a sensitive nature.
12. Estimated Burden of Information Collection
The total estimated burden for the roughly 14,000 creditors that originate mortgages and
therefore are subject to the proposed rule would be approximately 173,000 hours of ongoing
burden annually and 20,000 hours in one-time burden. Since creditors already provide
consumers copies of appraisals if a loan closes, the Bureau assumes that there are no required
software or information technology upgrades associated with implementing the rule, because all
of the actions required by the rule are already practiced by the affected institutions. Similarly, the
Bureau assumes that the creditor only incurs additional materials costs for applications that do
not result in an origination, and estimates this material cost to be $4,644,500 for all affected
creditors.1 The Bureau expects that the amount of time required to implement each of the
1

Based on its outreach and research, the Bureau assumes that the average appraisal is 20 pages long and that printing
a copy of an appraisal costs $0.10 per page. The Bureau assumes that 84% of appraisals are sent via e-mail, 15.75%
of appraisals are sent via the United States Postal Service, and 0.25% of appraisals are sent via courier. Mailing an
appraisal is assumed to cost $2.12 based on the cost of first class mail for a 3.7oz letter (20 pages of 20 lb paper
weighs 3.2oz with a 0.5oz allowance for an envelope), sending an appraisal via a courier is assumed to cost $17 ($15
for courier fees and $2 for replication costs) in material costs, and sending a copy via e-mail is assumed to cost
$0.05 of material cost.

proposed changes for a given institution may vary based on the size, complexity, and practices of
the respondent.
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
The total annualized on-going burden for the depository institutions and credit unions
with more than $10 billion in assets (including their depository affiliates) that originate mortgage
loans is estimated to be roughly 74,500 hours and the annualized ongoing burden for all nondepository institutions that originate mortgage loans is estimated to be 47,800 hours. These
respondents are estimated to incur an additional 5,800 hours and 4,600 hours in one-time burden,
respectively. For purposes of the PRA analysis under this proposed rule, the Bureau would
assume roughly 23,900 on-going burden hours and 2,300 one-time hours for the non-depository
institutions.2 The associated material costs are assumed to be $3,360,700 for depository
institutions and credit unions with more than $10 billion in assets and $1,283,700 for nondepository creditors. For purposes of PRA the Bureau would assume $641,900 of the material
costs for non-depository institutions.
14. Estimated Cost to the Federal Government
As the CFPB does not collect any information, the cost to the CFPB is negligible.
15. Program Changes or Adjustments
The CFPB’s proposal would implement in Regulation B the information collection
requirements described above. The CFPB’s proposal makes no changes to the other information
collections in Regulation B since the last OMB approval.
16. Plans for Tabulation, Statistical Analysis, and Publication
The results of the information collection will not be published.
17. Display of Expiration Date
We believe that displaying the OMB expiration date is inappropriate because it
could cause confusion by leading consumers to believe that the regulation sunsets as of
the expiration date. Consumers are not likely to be aware that the CFPB intends to
request renewal of OMB approval and obtain a new expiration date before the old one
expires.
18. Exceptions to the Certification Requirement
None.

2

There may be a small additional burden for privately insured credit unions estimated to originate mortgages. The
Bureau will assume half of the burden these institutions.