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New ECOA rule means collateral valuation pipelines may be leaking

regulatory changes

The Consumer Financial Protection Bureau’s Equal Credit Opportunities Act valuations rule, which goes into effect Jan. 18, mandates that all borrowers confirm statements prior to receiving an electronic copy of any appraisal report.

The CFPB’s rule requires that the lender or AMC notify borrowers of several key issues before electronically delivering any appraisal report. Mortgage software firm a la mode says it has the solution for keeping lenders in compliance.

Mercury Network’s secure borrower delivery tool now automatically notifies the borrower in accordance with ECOA, prior to the secure electronic delivery of the appraisal report, a la mode says. It also creates a full audit trail to prove compliance with the new regulation.

"More than 600 lenders and AMCs use Mercury Network to manage their collateral valuation pipelines, so we have to be innovative and on the forefront of compliance," noted Jennifer Miller, president of a la mode’s Mortgage Solutions Division. "These automated safeguards provide tremendous time savings and risk mitigation for our clients, while also allowing them to deliver far better service to their borrowers."

Some lenders and AMCs are still delivering appraisal reports as simple attachments in emails, a practice which goes against the Gramm-Leach-Bliley Act, and can have serious consequences. 

Many lenders and AMCs have already eliminated those risks by using an appraisal delivery tool offered by appraisal management software platforms, but many of those platforms have yet to address the new ECOA requirements.

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