ALEXANDRIA, Va. (2/21/08)—As part of a string of legal opinion letters released this week, the National Credit Union Administration (NCUA) advised credit unions about documentation required on real estate appraisals and records retention requirements. Each letter was in response to specific inquiries made by an individual credit union. A third letter on member business lending “direct experience” requirements (News Now Feb. 19) was posted on the agency Website at the same time. Regarding real estate appraisals, the NCUA said its rules do not require a credit union to have a checklist or narrative to document its review of an appraisal ( 12 C.F.R. Part 722). However, while not required, the practice is recommended in interagency guidance on independent appraisal and evaluation functions. In 2005, the NCUA, along with the other federal financial institution regulators, issued joint guidance, which stated in part that appraisal reviews should be documented in loan administration files, either in “checklist or narrative format.” It further stated that certain appraisals should be reviewed more comprehensively to assess the technical quality of the appraiser’s analysis prior to making a final credit decision, according to the NCUA. The NCUA opinion letter on records retention stated that a federal credit union may preserve original loan documents for outstanding loans to members, in an electronic format instead of a paper format. “The Electronic Signatures in Global and National Commerce (E-Sign) Act established a general rule of validity for electronic records and signatures for transactions, effective October 1, 2000, with records retention requirements effective March 1, 2001,” the letter said. It referred attention to Part 749 of the agency's rules and regulations, which describe obligations for federally insured credit unions to maintain a records preservation program and implements the E-Sign Act.