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Agencies issue guidelines on real estate appraisalsevaluations
WASHINGTON (12/3/10)—The National Credit Union Administration (NCUA), in conjunction with other federal financial institution regulators, has emphasized that financial institutions are responsible for selecting appraisers and people performing evaluations based on their competence, experience, and knowledge of the market and type of property being valued. The NCUA and the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision in guidance released on Thursday also noted that financial institutions should demonstrate the independence of their processes for obtaining property values, and adopt standards for appropriate communications and information-sharing with appraisers and people performing evaluations. The NCUA and related regulators, who comprise the Federal Financial Instituions Examination Council (FFIEC) also called on financial institutions to maintain strong internal controls to ensure reliable appraisals and evaluations, and added that those institutions are responsible for monitoring and occasionally updating valuations of collateral for existing real estate loans and for transactions, such as modifications and workouts. The FFIEC guidelines, in the works for more then two years, replace guidance that was issued in 1994 and incorporate recent supervisory releases on appraisal practices. The new release also updates the guidance to better reflect changes in technology that have occurred during the last 16 years. “Financial institutions should review their appraisal and evaluation programs to ensure they are consistent with the guidelines,” an FFIEC release said. The new guidance was first proposed by the regulators in 2008, and CUNA in early 2009 said that credit unions were already taking "the necessary safeguards to ensure the integrity of the appraisal process" and were "meeting the expectations outlined in the guidelines." For the guidance, use the resource link.
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