We are looking at financing a loan for a commercial customer. The peer bank who holds the loan ordered an appraisal in September '08, for purposes of renewal which they did, and are now looking to reduce their overall exposure, so have offered our mutual customer the option to move on at no penalty.

Our commercial market has remained relatively stable in the last year, the appraisal the current bank ordered puts the loan at about 65% ltc, we are looking at straight refi, no new money, and would like the appariaser to review and reassign the 09/08 appraisal.

Someone on the higher up though feels he recalls seeing someplace, of course does not recall where, that we should not be doing this with any appraisal over 6 months old. I am digging and cannot seem to find anything along these lines.

Is anyone aware of what this senior officer may have seen?? or thoughts on this appraisal being reassigned (the appraiser is one of our commercial appraisers already).

"would like the appariaser to review and reassign the 09/08 appraisal."

The USPAP will not allow an appraiser to reassigned an appraisal ordered by another client, even with permission. In fact, depending on the circumstances, the appraiser should not even discuss the previous appraisal with you even with permission of the previous client.

See the USPAP Advisory Opinions 26 & 27

thank you!

Just to expand of this conversation because JJ does have another outlet since it appears that the existing F/I will give him the appraisal they have:

I have never seen anything related to appraisals that puts a limit on the age of the appraisal. There is more discussion on the "useful" life of that appraisal.

From the FAQ on the Appraisal Regulations and the Interagency Statement on Independent Appraisal and Evaluation Functions dated 03/22/05:

"A regulated institution may accept an appraisal transferred from another regulated institution or from a financial services institution (that is, a non-regulated institution), provided 1) the appraiser is engaged directly by the institution transferring the appraisal, 2) the appraiser has no direct or indirect interest in the property or transaction, 3) the existing appraisal or evaluation remains valid, and 4) the regulated institution determines that the appraisal conforms to the agencies’ appraisal requirements and interagency guidelines and is otherwise appropriate. (A financial services institution describes entities that provide services in connection with real estate lending transactions on an ongoing basis.)

Regulated institutions are expected to perform a more thorough review when accepting an appraisal from another financial services institution to confirm that the appraisal complies with the regulation and has sufficient information to support the lending decision. Moreover, the regulated institution accepting the appraisal should determine whether appropriate documentation is available to confirm that the financial services institution (not the borrower) ordered the appraisal."

A thorough review would include:

Passage of Time
The volatility of the local market
the availablity of financing
the inventory of compteting properties
improvements to or lack of maintenance of the subject property
or competing surrounding properties
changes in zoning
environmental contamination.

The F/I must document the information sources and analyses used to conclude that an existing appraisal or evaluation remains valid for

Question: I have a LO who just brought in a commercial appraisal that had been ordered by the business owner about 5 months ago. They want to use their own appraisal and not pay for another one. They had the appraiser call us and state that he will assign it over to us at no cost. Does this sound right to you all? I'm thinking no...but...I don't want to be wrong. Can someone help me out with this? I am searching threads and haven't come up with that I'm looking for yet. Any and All assistance will be appreciated.

The Bank cannot use, in any way, shape or form an appraisal ordered by the Borrower. The appraiser calling and stating that he will assign it over to you is a violation of the agencies' regulations and USPAP. As Randy says above - an appraisal cannot be re-assigned nor can it be readdressed with the intent to conceal the original client.