b'ECOA Valuation Rule continued from page 13 rental units and similar investmentvalue estimate of a dwelling prepared inconsidered to have been developed in properties are also covered.connection with a credit application.Asconnection with the application for credit a surprise to most lenders, this includesand the Valuations Rule is not applicable. Are Mixed-Used Propertiesany internal valuations that the lenderIf the creditor chooses not to use the Considered Dwellings?performed.Publicly-available aggregatedvaluationsuch as in instances where the valuations including publicized sales pricesvaluation did not factor into the transaction Buildings that are not used for solelyor mortgage totals, tax assessments, andat issuebut was nonetheless prepared residential purposessuch as buildingssimilar data are not considered valuations.in connection with the credit application, that contain commercial or retail spaceHowever, if a creditor performs somethe creditor is permitted to inform the attached to a residential structurecananalytical work ascribing a propertysapplicant that the valuation was not qualify as a dwelling for the purposes ofvalue by referencing publicly availableutilized but would still have to offer a copy the Valuation Rule if the residential sectorlists, then it may qualify as a valuation forof the valuation to the applicant. of the mixed-use structure has betweenthe purposes of the rule. one and four units and is used to secureKey Takeaways for the loan.However, if only the retail space,Was the Valuation DevelopedMortgage Lenderswithout the residential segment attached,in Connection with the is pledged as collateral, it would not qualifyApplication?The Valuations Rule mandates that all as a dwelling for the purposes of thelenders provide a copy of the appraisal Valuations Rule and the transaction wouldA valuation is considered to have been(or other internally produced valuation) to not be covered.developed in connection with a givenborrowers if all of the following conditions application if it was produced over theare met: How Can You Tell if thecourse of the application timeline. In the(1)There was an application for credit;Appraisal or Written Valuationcase of loan renewals, for instance, in is Prepared in Connection withwhich applicants ask for a renewal of a(2)The application was secured by a first the Application?preexisting credit extension, the associatedlien on a dwelling; and valuation for the loan is considered to(3)A valuation was prepared in In order to determine if the appraisalhave been developed in connection withconnection with the credit and/or written valuation is preparedthe applicationgiving the applicant theapplication.in connection with the application,right to get the disclosure and appraisal creditors first have to verify if there iscopies per the Valuations Rule.On theHopefully,thenuancedscenarios an existing valuation and, if so, whetherother hand, if an appraisal was produceddiscussed above should help shed some it was prepared in connection with thefor the preexisting extension of credit andlight on the Valuation Rules practical application.A valuation is defined as anynot the renewal, then that valuation is notimplementation. The Real Estate Finance Group at Geraci LLP is managed by Nema Daghbandan, Esq., a partner with the law firm.Mr. Daghbandans practice entails all facets of lending matters across the country including but not limited to the preparation of loan documents and addenda in all fifty states, loss mitigation efforts, preparation and negotiation of secondary market documents including loan sales and participation agreements, line of credit/warehouse facilities, hypothecations and securitizations.Mr. Daghbandan advises financial institutions on various lending matters including licensing, usury, and foreclosure. Mr. Daghbandan is also an expert in default management and leads the firms nonjudicial trustee group.Page 14Summer 2020Points of Interest'