On December 2, 2010, the Office of the Comptroller of the Currency, Treasury (OCC), the Federal Reserve (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), Department of the Treasury, and the National Credit Union Administration (NCUA) released final Interagency Appraisal and Evaluation Guidelines (the “Guidelines”) to provide appraisal regulations and supervisory guidance to institutions and examiners about prudent appraisal and evaluation programs.

Guidelines were initially issued in October 1994. Since the issuance of the original Guidelines, the agencies have issued periodic supervisory guidance update documents.  These new Guidelines replace existing supervisory guidance documents. They commented that further revisions to the Guidelines may be necessary to address future regulations implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

A copy of the final Guidelines can be accessed here.  Highlights of the Guidelines include:

• Appraisal Independence – The Guidelines reaffirm an institution’s collateral valuation functions should be independent of the loan production process. The Guidelines discuss the types of communications that would not be construed as “coercion or undue influence” on appraisers as well as examples of actions that would compromise independence.
• Review Appraisals – The Guidelines provide the agencies’ expectations for a Lender to establish an effective, risk-focused process for reviewing appraisals and evaluations prior to a final credit decision.  The Guidelines 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.
• Monitoring Collateral Value – The Guidelines address the importance of monitoring collateral values in the institution’s lending markets, in accordance with real estate lending regulations and guidelines. The new Guidelines reaffirm an institution’s responsibility to have policies and procedures that establish standards for obtaining current collateral valuation information to facilitate its decision to engage in loan modifications or workouts.
• USPAP Violation Referrals – The Guideline confirms that a lender should refer to state appraiser regulatory authorities when it suspects that a state licensed or certified appraiser failed to comply with USPAP, applicable state laws, or engaged in unethical or unprofessional conduct.

To learn more on how IRR-Residential can help your organization be  compliant with these Guidelines as well as those implemented as part of the Dodd-Frank Wall Street Reform Act, contact our client development department at busdev@irr-residential.com or 913-261-1890.