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Q: Is an Automated Valuation Model (AVM) a valuation which must be delivered to the applicant no later than three business days prior to consummation just like an appraisal?

A: Yes. An AVM is a valuation that must be delivered to an applicant promptly upon completion, but no more than three business days prior to consummation. The ECOA Valuations Rule is clear in that it applies to all appraisals and all other valuations developed in connection with an application secured by a first lien on a dwelling.

The Official Interpretation of 14(a)(1)-5 to § 1002.14 (rules on providing appraisals and other valuations) specifically references AVMs. In relevant part, it indicates:

5. Promptly upon completion-examples. Examples in which the “promptly upon completion” standard would be satisfied include, but are not limited to, those in subparagraphs i, ii, and iii below. Examples in which the “promptly upon completion” standard would not be satisfied include, but are not limited to, those in subparagraphs iv and v below.

iii. Sending a copy of an AVM report within a week after its receipt and with sufficient time before consummation (or account opening for open-end credit). The creditor receives an automated valuation model (AVM) report on day 5 after receipt of the application and treats the AVM report as complete when it is received. On day 12 after receipt of the application, the creditor sends the applicant a copy of the valuation. The applicant actually receives the valuation more than three business days before the date of consummation (or account opening). The creditor has provided the copy of the AVM report promptly upon completion.

v. Delay in sending an AVM report while waiting for completion of a second valuation. The creditor receives an AVM report on day 5 after application and completes its review of the AVM report the day it is received. The creditor also has ordered an appraisal, but the initial version of the appraisal received by the creditor is found to be deficient and is sent for review. The creditor waits 30 days to provide a copy of the completed AVM report, until the appraisal is completed on day 35. The creditor then provides the applicant with copies of the AVM report and the revised appraisal. While the appraisal report was provided promptly upon completion, the AVM report was not.

Note, the above requirements apply to business purpose loans if secured by a 1-4 family residence.