Beginning on January 1, 2007, California Financial Code Section 22317.2 will authorize a California finance lender to collect a fee for an automated valuation model ("AVM ") result prepared by a third party as long as the fee does not exceed the actual cost paid to the third party for the written AVM result in lieu of an appraisal. A borrower may not be charged for both an AVM result and an appraisal for the same property in a single transaction. Only one fee for providing an AVM result or an appraisal for the same real property may be collected, unless the borrower has obtained a new or additional loan and more than one year has elapsed since the prior delivery of the AVM result or appraisal. If a fee has been paid, another fee for an appraisal may be imposed within one year if the borrower has obtained a new or additional loan and if the amount paid for the AVM is subtracted from the appraisal fee.

The finance lender must provide notice to a borrower of the borrower's right to receive a copy of the AVM result within 15 days after the lender receives the borrower's written application, provided the applicant has paid the fee. Section 22317.2 provides that a borrower's written request for a copy must be received by the lender no later than 90 days after (1) the lender has provided notice of the action taken on the application, including a notice of incompleteness, or (2) the application has been withdrawn. The lender must mail or deliver a copy of the AVM result within 15 days after receiving a written request from the borrower, or within 15 days after receiving the AVM result, whichever occurs later. The notice of the borrower's right to request a copy of the AVM result must be printed in at least 10-point boldface type, as a separate document in a form that the borrower may keep and include the following statement: "An automated valuation model is not an appraisal. It is a computerized property valuation system that is used to derive a real property value." An address to which the request should be sent must be specified in the notice, and a release of the copy to the borrower may be conditioned upon payment of the fee.

DocMagic's Legal/Compliance Department has prepared an Automated Valuation Model Notice that complies with Section 22317.2. This California disclosure will appear in both initial and closing packages, where the loan originator is a lender or broker. If you have any questions about this disclosure, please contact the Compliance Department.