For our construction loans, we have been relying on estimated project cost for our loan to value calculation for credit approval. Thus, the officers have disclosed 'estimated property value' on the CD, even if there was an appraisal ordered. A recent external audit revealed that they (the hired auditors) interpret the commentary in 1026.38(a)(3)(vii) to say that if we order an appraisal we must disclose 'appraised value', while management is focusing on the part that states 'the creditor discloses the value determined by the appraisal or valuation [/i]used to determine approval of the credit transaction[i]. I can see how the regulation could be interpreted either way, I'm just wondering if anyone has had this come up with examiners and been given any guidance.

For transactions involving construction where there is no seller, the creditor must disclose the value of the property that is used to determine the approval of the credit transaction, including improvements to be made on the property if those improvements are used in determining the approval of the credit transaction.

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That is how I interpreted it as well, thanks!