interagency appraisal and evaluation guidelines

In implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act),[10] An institution should use caution if it engages a third party to administer any part of its appraisal and evaluation function, including the ordering or reviewing of appraisals and evaluations, selecting an appraiser or person to perform evaluations, or providing access to analytical methods or technological tools. Such persons may include appraisers, real estate lending professionals, agricultural extension agents, or foresters. Consider additional information about the subject property or about comparable properties. Standards of performance measures to be used. In response to these comments, the Guidelines were expanded to clarify the Agencies' expectations for an appropriate depth of review, the educational and training qualifications for reviewers, the resolution of valuation deficiencies, and related documentation standards. an appraisal rather than an evaluation when the institution’s portfolio risk increases or for higher-risk real estate-related financial transactions. endstream endobj startxref An institution may find it appropriate to modify a loan or to engage in a workout with an existing borrower. An example of an extraordinary assumption is when an appraiser assumes that an application for a zoning change will be approved and there is no evidence to suggest otherwise. ○ The financial services institution (not the borrower) ordered the appraisal. This prototype edition of the [28] However, the Agencies are issuing the Guidelines to promote consistency in the application and enforcement of the Agencies' current appraisal requirements and related supervisory guidance. The Agencies' appraisal regulations must require, at a minimum, that real estate appraisals be performed in accordance with generally accepted uniform appraisal standards as evidenced by the appraisal standards promulgated by the Appraisal Standards Board, and that such appraisals be in writing. This interagency statement outlines existing flexibilities in industry appraisal standards and in the appraisal regulations issued by the OCC, FRB, FDIC, and NCUA (agencies) and describes temporary changes to Fannie Mae and Freddie Mac appraisal standards that can assist lenders during this challenging time. 12/21/2020, 294 1657 0 obj <>/Filter/FlateDecode/ID[<317ED4AAB38EDD43BDC221096B7C1FBE>]/Index[1652 14]/Info 1651 0 R/Length 48/Prev 216112/Root 1653 0 R/Size 1666/Type/XRef/W[1 2 1]>>stream 12/21/2020, 144 The Appendix also addresses the expertise necessary to manage the use of a method or tool, which may require an institution to employ additional personnel or engage a third party. The revisions also confirm that examiners will forward such findings to their supervisory office for appropriate disposition if there are concerns with an institution's ability or willingness to make a referral or file a SAR. Sales concessions do not include fees that a seller is customarily required to pay under state or local laws. 1376 (2010). Prior to entering into any arrangement with a third party for valuation services, an institution should compare the risks, costs, and benefits of the proposed relationship to those associated with using another vendor or conducting the activity in-house. The revisions reflect clarifying text in response to comments from institutions on the regulatory requirements for reappraisals of real estate collateral for existing credits and subsequent transactions, particularly loan workout situations. An institution's policies and procedures for reviewing appraisals and evaluations, at a minimum, should: An institution should establish qualification criteria for persons who are eligible to review appraisals and evaluations. (See the discussion in these Guidelines on Selection of Appraisers or Persons Who Perform Evaluations.). documents in the last year, 36 Government-Sponsored Agency, 10. Three categories of effective dates—retrospective, current, or prospective—may be used, according to the intended use of the appraisal assignment. Conversely, financial institutions found the Proposal to be an improvement over existing guidance and indicated that it would promote consistent application of the Agencies' appraisal requirements. Refer to Federal regulations at FRB: 12 CFR 208.62, 211.5(k), 211.24(f), and 225.4(f); FDIC: 12 CFR part 353; NCUA: 12 CFR part 748; OCC: 12 CFR 21.11; OTS: 12 CFR 563.180; and FinCEN: 31 CFR 103.18. Although not required, an institution may use state certified or licensed appraisers to perform evaluations. 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