WASHINGTON (1/3/11)—The Federal Reserve Board’s approach to its interim final rule on appraisal independence, overall, will help prevent actions designed to coerce or manipulate appraisers, the Credit Union National Association (CUNA) agreed in a recent comment letter. However, the Fed must do more to protect small financial institutions from an unmanageable burden, the group added. CUNA supported many aspects of the new rule, but encouraged the Fed to increase the asset threshold for the small institution safe harbor from the currently proposed $250 million in assets to a more reasonable $1 billion in assets. The CUNA letter said that the reasons cited by the Fed rule’s preamble for differentiating between small and large institutions apply equally to institutions with up to $1 billion in assets. As an example, CUNA cited the Fed’s example that institutions below $250 million in assets “may decrease their consumer lending operations due to an inability to comply with the rules, such as the firewalls requirement, because of limited staff resources and similar factors.” “This is also true for many institutions with up to $1 billion in assets,” CUNA told the Fed. “Many credit unions and other community financial institutions with more than $250 million but fewer than $1 billion in assets have small staffs and relatively limited resources compared to larger institutions with national or regional presences.” Beyond the asset threshold, CUNA had a series of recommendations to improve the rule. For instance, CUNA recommended some changes in the way appraiser fees are to be assessed. Since 2008, many creditors have used appraisal management companies to avoid the appearance of undue influence on an appraiser’s conclusions under the Home Valuation Code of Conduct, and appraisal management companies have generally depressed the average compensation of appraisers, CUNA noted. “We believe that credit unions that prefer to use appraisal management companies should be free to continue to use them, as the rule contemplates. However, credit unions should be able to consider appraiser fees that existed prior to the Home Valuation Code of Conduct in order to be able to retain the most experienced appraisers who produce the most accurate appraisals,” said the CUNA letter. Use the resource link below for CUNA’s complete remarks.