The State of California passed into law the Fair Appraisal Act (the “Act”), along with over 30 other bills on September 28, 2021, as part of state efforts to promote affordable housing and fair housing principles. Specifically, the Act addresses discrimination during the appraisal process of a residential real estate transaction. See our prior article discussing this change here.
Part of the Act creates a new notice requirement with the addition of Section 1102.6(g) to the California Civil Code. Effective July 1, 2022, Section 1102.6g(a) requires the notice to be provided in every contract for the sale of real property. Also, when refinancing a first lien purchase money loan, licensees must deliver the new notice prior to or with the Loan Estimate or the Mortgage Loan Disclosure Statement or may include it with the federal Equal Credit Opportunity Act (12 C.F.R. § 1002 et seq.) disclosure. For purposes of the notification requirement, a licensee is defined as “a depository institution chartered under federal or state law, a person covered by the licensing requirements of Division 9 (commencing with Section 22000) or Division 20 (commencing with Section 50000) of the Financial Code, or a person licensed pursuant to Part I (commencing with 10000) of Division 4 of the Business and Professions Code.”
The notice must state the following:
“Any appraisal of the property is required to be unbiased, objective, and not influenced by improper or illegal considerations, including, but not limited to, any of the following: race, color, religion (including religious dress, grooming practices, or both), gender (including, but not limited to, pregnancy, childbirth, breastfeeding, and related conditions, and gender identity and gender expression), sexual orientation, marital status, medical condition, military or veteran status, national origin (including language use and possession of a driver’s license issued to persons unable to prove their presence in the United States is authorized under federal law), source of income, ancestry, disability (mental and physical, including, but not limited to, HIV/AIDS status, cancer diagnosis, and genetic characteristics), genetic information, or age. If a buyer or seller believes that the appraisal has been influenced by any of the above factors, the seller or buyer can report this information to the lender or mortgage broker that retained the appraiser and may also file a complaint with the Bureau of Real Estate Appraisers at https://www2.brea.ca.gov/compliant/ or call (916) 552-9000 for further information on how to file a complaint.
DocMagic will begin providing the California Fair Appraisal Notice (Form ID: CAFAN.MSC) in production on July 1, 2022 and has made the form available in our testing environment. The form will be included in in initial packages for all first lien refinance loans with a property state of California. DocMagic will not provide the form for purchase loans as the language for the notice is required to be included in the sales contract.
If you have any questions, please contact DocMagic’s Compliance Department.
