I received an appraisal today for X amount. Later in the morning I received the same appraisal with a different value. I emailed the appraiser and asked why the change. He told me that the loan officer called him questioning the value. The appraiser changed the Cap rate (due to credit worthy tenant) increasing the value by the amount needed to complete the loan transaction. I know what I want to do (SAR on both) but I don't know if that is too extreme. Any other suggestions?

I would definitely have a problem with this during my review and more than likely would not accept this appraisal from the appraiser. I also would feel compelled to discuss this with the Kentucky Real Estate Board as it appears the appraiser (and lender) violated the law.

From Reg Z 1026.42

(g) Mandatory reporting. (1) Reporting required. Any covered person that reasonably believes an appraiser has not complied with the Uniform Standards of Professional Appraisal Practice or ethical or professional requirements for appraisers under applicable state or Federal statutes or regulations shall refer the matter to the appropriate state agency if the failure to comply is material. For purposes of this paragraph (g)(1), a failure to comply is material if it is likely to significantly affect the value assigned to the consumer's principal dwelling.

(2) Timing of reporting. A covered person shall notify the appropriate state agency within a reasonable period of time after the person determines that there is a reasonable basis to believe that a failure to comply required to be reported under paragraph (g)(1) of this section has occurred.

(3) Definition. For purposes of this paragraph (g), “state agency” means “state appraiser certifying and licensing agency” under 12 U.S.C. 3350(1) and any implementing regulations. The appropriate state agency to which a covered person must refer a matter under paragraph (g)(1) of this section is the agency for the state in which the consumer's principal dwelling is located.


There are some fairly hefty penalites as I recall for not reporting violations. I believe the first violation is $10,000 per day and the second violation is $25,000 per day. Don't quote that as fact though.

Does it matter that the loan request is not subject to Reg Z? The loan was for commercial construction.

Only for reg z purposes. It is prohibited for all loans. If this appraiser complains about your bank, expect to be contacted, and perhaps have a special appraisal targeted exam by your regulator.