The New Appraisal and Evaluation Guidance
Financial Institutions
May 01, 2011
by
Kenneth Utter, CPA
On December 2, 2010, the federal financial regulatory agencies consisting of the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration (collectively, the “Agencies”) issued final
supervisory guidance to financial institutions concerning the use of real estate appraisals and evaluations in making credit decisions. The Interagency Appraisal and Evaluation Guidelines, which replaced the 1994 guidelines, explain the Agencies’ minimum regulatory standards for appraisals. The guidance states that a financial institution’s real estate lending program should include an appropriate real estate appraisal and evaluation program. It goes on to state that an institution’s appraisal and evaluation policies and procedures will be reviewed as part of the examination of the institution’s overall real estate-related activities. An institution that fails to comply with the Agencies’ appraisal regulations or to maintain a sound appraisal and evaluation program consistent with the supervisory guidance will be cited in supervisory letters or examination reports and may be criticized for unsafe and unsound banking practices. Deficiencies will require appropriate corrective action.
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Length: 3 pages (PDF 131 kB)