The Federal Reverse issued final appraisal and evaluation guidelines for real estate appraisals and evaluations on Thursday.
The Interagency Appraisal and Evaluation Guideline replace the 1994 guidelines and explain the agencies minimum regulatory standards for appraisals.
According to the Fed, the guidelines emphasize 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. 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, according to the guidelines.
In promoting sound credit decisions, the guidelines emphasize the importance of institutions maintaining strong internal controls to ensure reliable appraisals and evaluations. Institutions also are responsible for monitoring and periodically updating valuations of collateral for existing real estate loans and for transactions, such as modifications and workouts, according to the guidelines.
The Fed said that due to the Dodd-Frank Wall Street Financial Reform and Consumer Protection Act of 2010, future revisions to the appraisal guidelines may be necessary after regulations are adopted to implement the Act. However, the agencies are issuing the guidelines to promote consistency in the application and enforcement of its current appraisal requirements and related supervisory guidance.
The guidelines were issued jointly by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), FDIC, Office of Thrift Supervision, and the National Credit Union Administration released the guidelines and an accompanying joint press release regarding the guidelines.
View a copy of the guidelines here.