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Appraisals: Automated Valuation Reports
Financial Code Section 22317.2
This new law seeks to clarify the use of automated valuation models (AVM) as appraisals. This law also protects borrowers from being charged for both an AVM and a regular appraisal for the same transaction.
An AVM is a computerized property value model designed to replicate conventional appraisal methods through the use of demographics, property characteristics, sales prices, and price trends to calculate a value for the specific property.
Technological valuation science has been around for over a decade, but recently has been used more by lenders in lieu of a full appraisal. Some lenders also use AVMs to double-check traditional appraisals.
This new law:
- Prohibits lenders from charging borrowers for both an AVM a full appraisal for the same transaction, unless the borrower has obtained a new or additional loan, and more than one year has elapsed since the prior AVM result.
- Provides that if a fee for an AVM has been paid within the one-year period, then an appraisal fee minus the amount paid for the AVM may be charged for the appraisal on the same property.
- Requires lenders to notify borrowers of their right to receive a copy of the AVM result, and that the borrower shall submit their written request no later than 90 days after receiving notice.
- Requires lender to give borrowers a written statement describing what an AVM is, and that it is not an appraisal.
For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
web site: dca.lacounty.gov