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.