Agencies announce overhaul of appraisal guidelinesMortgagePress.comNational Credit Union Administration, Interagency Appraisal and Evaluation Guidelines, Fannie Mae, Freddie Mac, USPAP
The federal banking agencies and the National Credit Union
Administration released an extensive proposed revision of their
Interagency Appraisal and Evaluation Guidelines (Guidelines). The
proposal appears to come in response to the tentative agreement
announced this March between New York Attorney General Andrew
Cuomo, Fannie Mae, Freddie Mac, and the Office of Federal Housing
Enterprise Oversight.
Many of the proposed changes in the federal guidelines parallel
aspects of the New York Attorney General agreement. The federal
proposal, however, unlike the New York agreement:
• Does not prohibit lenders from using "in-house" staff
appraisers to conduct initial appraisals;
• Does not prohibit lenders from using appraisal management
companies that they own or control; and
• Does not bar mortgage brokers from selecting
appraisers.
Changes from the current Guidelines in the proposal include:
• An expansion of existing requirements for appraiser
independence, such as an explicit ban on lenders setting a target
value or loan-to-value ratio for property;
• Clarification that the Uniform Standards of Professional
Appraisal Practice (USPAP) merely set minimum appraisal standards
for federally-related transactions and that the Guidelines go
beyond USPAP in some respects;
• The acknowledgement of the role of automated valuation
models and tax assessment valuations, which may be used when an
"evaluation" short of an appraisal is needed, but may not replace a
mandatory appraisal;
• Added emphasis on the importance of monitoring portfolios
and replacing or updating valuations when necessary; and
• A clarification of the exemptions from the statutory
mandatory appraisal requirement.
Comments on the proposal will be due 60 days after publication
in the Federal Register, which is forthcoming.
For a copy of the draft of the proposal, click
here.
