A lender takes an application for a $40,000 second-lien home improvement loan on a 3-unit dwelling and orders a desktop valuation. The processor asks whether the Reg B appraisal copy rule applies. Does Regulation B's appraisal-copy requirement apply to this second-lien transaction?
Correct Answer
D) No: the rule reaches credit secured by a 1st lien on a dwelling
The rule attaches to credit secured by a first lien on a dwelling. A second lien falls outside it, whatever kind of valuation was ordered. Other choices: not every valuation on every dwelling is covered, because the lien position is part of the trigger; a 1-to-4 unit residential structure is a dwelling under the definition, so a 3-unit building is squarely within it; and there is no dollar threshold in the section. Source: 12 CFR 1002.14(a)(1)
Why This Is the Correct Answer
The rule attaches to credit secured by a first lien on a dwelling. A second lien falls outside it, whatever kind of valuation was ordered. Other choices: not every valuation on every dwelling is covered, because the lien position is part of the trigger; a 1-to-4 unit residential structure is a dwelling under the definition, so a 3-unit building is squarely within it; and there is no dollar threshold in the section. Source: 12 CFR 1002.14(a)(1)
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