We have a customer that was originally going to finance their commercial property through another institution but changed their mind and decided to finance the property through us. The other institution already has an appraisal that was done for the property within the past few weeks before the customer changed their mind. Can this appraisal be transferred to our institution and be used for the loan? If so, what steps should we take to have the appraisal transferred to us?

An assignment by the other financial institution along with a copy of the original engagement letter.

Yes, this is covered in the Interagency Appraisal and Evaluations Guidelines. Here is the relevant excerpt -

Appraisals From Other Financial Services Institutions. The Agencies’ appraisal regulations specify that an institution may use an appraisal that was prepared by an appraiser engaged directly by another financial services institution, provided the institution determines that the appraisal conforms to the Agencies’ appraisal regulations and is otherwise acceptable. An institution should assess whether to use the appraisal prior to making a credit decision. An institution should subject such appraisals to at least the same level of review that the institution performs on appraisals it obtains directly for similar properties and document its review in the credit file. The documentation of the review should support the institution’s reliance on the appraisal. Among other considerations, an institution should confirm that:

* The appraiser was engaged directly by the other financial services institution.
* The appraiser had no direct, indirect, or prospective interest, financial or otherwise, in the property or transaction.
* The financial services institution (not the borrower) ordered the appraisal. For example, an engagement letter should show that the financial services institution, not the borrower, engaged the appraiser.

An institution must not accept an appraisal that has been readdressed or altered by the appraiser with the intent to conceal the original client. Altering an appraisal report in a manner that conceals the original client or intended users of the appraisal is misleading, does not conform to USPAP, and violates the Agencies’ appraisal regulations.

Is the transferring institution able to charge the receiving institution a fee for transferring the appraisal? I could not find this in the agency rules.

Don't know why it would not be permitted as long as the fee was reasonable to the costs for doing the assignment. If they already collected for the appraisal from the borrower, double dipping would probably be a Section 8 unearned fee violation if the transaction is covered under RESPA.

Reviving this thread. Is the assignment from the other institution required or suggested? I have notes from a webinar that the "presenter suggests that banks that want to use the report obtain it directly from the institution that ordered it and confirm it includes a copy of the engagement letter or request for appraisal. Borrower engaged or borrower provided appraisal reports should not be used"

I just came across a scenario where the borrower on a commercial gave us the appraisal ordered by another bank. We do have a copy of the engagement letter and the appraisal was reviewed by our Appraisal Management Company. We obviously have no documentation of the assignment.

Is the assignment from the other institution required or suggested?

Required. The appraisal belongs to them and you have no right to use it without them assigning it to you.


I just came across a scenario where the borrower on a commercial gave us the appraisal ordered by another bank.

You cannot use that appraisal under the Interagency Guidelines.