We have a commercial loan officer that wants to make two loans on the same piece of property - a first mortgage and second mortgage. The property is worth $1.5 million according to the tax assessment and the loan amounts together are $400,000 so there is amble LTV. The credit risk is low.

The loan officer wants to make two loans for $200,000 each to circumvent getting an appraisal. My reaction is that this is contrary to FIRREA and would result in a violation.

Is my reaction correct?

Big Time Correct, structuring loan transactions to avoid obtaining a conforming appraisal to USPAP is a violation. Goodnight, how blatant can these loan officers get? I bet this person has a lending limit that is maybe $250,000 (so he doesn't have to get approval from a committee or the next level up). If not, does he think it would be ok to do multiple loans so that he can approve them under his authority only ? Oh, man these primadonas burn me up ! Whew, I am not in a good mood today.

I take it this is a business loan and the primary source of repayment is the proceeds from the sale of the property or the rental income???

that is correct - repayment source is rental income