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#255225 - 10/12/04 03:25 PM Help! Appraisal Reviews for Loans Over $1 Million
Anonymous
Unregistered

We understand there is an appraisal review checklist that must be performed for real estate loans over $1 million. Will some please cite the requirement, provide a link, or better yet provide the checklist? Many thanks!

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Lending Compliance
#255226 - 10/12/04 06:32 PM Re: Help! Appraisal Reviews for Loans Over $1 Million
RR Sarah Offline
Power Poster
RR Sarah
Joined: Mar 2004
Posts: 2,505
Up North
I would start by reviewing the Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Kirchman has put it in plain English (www.kirchman.com -- Appraisal and Appraiser Standards).
_________________________
Sometimes you have to burn a few bridges to keep the crazies from following you.

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#255227 - 10/12/04 07:34 PM Re: Help! Appraisal Reviews for Loans Over $1 Million
Johncrcm Offline
100 Club
Joined: Dec 2002
Posts: 195
Eastern KY
FED-REGS, BANK-COMPLIANCE, 12 CFR §34.42 Definitions.
12 CFR §34.42

Definitions.

(a) Appraisal means a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion as to the
market value of an adequately described property as of a specific date(s), supported by the presentation and analysis of relevant market
information.

(b) Appraisal Foundation means the Appraisal Foundation established on November 30, 1987, as a not-for-profit corporation under the laws
of Illinois.

(c) Appraisal Subcommittee means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.

(d) Business loan means a loan or extension of credit to any corporation, general or limited partnership, business trust, joint venture, pool,
syndicate, sole proprietorship, or other business entity.

(e) Complex 1-to-4 family residential property appraisal means one in which the property to be appraised, the form of ownership, or market
conditions are atypical.

(f) Federally related transaction means any real estate-related financial transaction entered into on or after August 9, 1990, that:

(1) The OCC or any of its regulated institution engages in or contracts for; and

(2) Requires the services of an appraiser.

(g) Market value means the most probable price which a property should bring in a competitive and open market under all conditions
requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions
whereby:

(1) Buyer and seller are typically motivated;

(2) Both parties are well informed or well advised, and acting in what they consider their own best interests;

(3) A reasonable time is allowed for exposure in the open market;

(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

(5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.

(h) Real estate or real property means an identified parcel or tract of land, with improvements, and includes easements, rights of way,
undivided or future interests, or similar rights in a tract of land, but does not include mineral rights, timber rights, growing crops, water rights, or
similar interests severable from the land when the transaction does not involve the associated parcel or tract of land.

(i) Real estate-related financial transaction means any transaction involving:

(1) The sale, lease, purchase, investment in or exchange of real property, including interests in property, or the financing thereof; or

(2) The refinancing of real property or interests in real property; or

(3) The use of real property or interests in property as security for a loan or investment, including mortgage-backed securities.

(j) State certified appraiser means any individual who has satisfied the requirements for certification in a State or territory whose criteria for
certification as a real estate appraiser currently meet the minimum criteria for certification issued by the Appraiser Qualifications Board of the
Appraisal Foundation. No individual shall be a State certified appraiser unless such individual has achieved a passing grade upon a suitable
examination administered by a State or territory that is consistent with and equivalent to the Uniform State Certification Examination issued or
endorsed by the Appraiser Qualifications Board of the Appraisal Foundation. In addition, the Appraisal Subcommittee must not have issued a
finding that the policies, practices, or procedures of the State or territory are inconsistent with Title XI of FIRREA. The OCC may, from time to
time, impose additional qualification criteria for certified appraisers performing appraisals in connection with federally related transactions
within its jurisdiction.

(k) State licensed appraiser means any individual who has satisfied the requirements for licensing in a State or territory where the licensing
procedures comply with title XI of FIRREA and where the Appraisal Subcommittee has not issued a finding that the policies, practices, or
procedures of the State or territory are inconsistent with Title XI. The OCC may, from time to time, impose additional qualification criteria for
licensed appraisers performing appraisals in connection with federally related transactions within its jurisdiction.

(l) Tract development means a project of five units or more that is constructed or is to be constructed as a single development.

(m) Transaction value means:

(1) For loans or other extensions of credit, the amount of the loan or extension of credit;

(2) For sales, leases, purchases, and investments in or exchanges of real property, the market value of the real property interest involved;
and

(3) For the pooling of loans or interests in real property for resale or purchase, the amount of the loan or market value of the real property
calculated with respect to each such loan or interest in real property.

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#255228 - 10/12/04 07:38 PM Re: Help! Appraisal Reviews for Loans Over $1 Million
Johncrcm Offline
100 Club
Joined: Dec 2002
Posts: 195
Eastern KY
I developed a checklist from this for my audit. Sheshunoff and Kirchman are a source for a loan operation's checklist.

FED-REGS, BANK-COMPLIANCE, 12 CFR §34.44 Appraisal standards.
12 CFR §34.44

Appraisal standards.

For federally related transactions, all appraisals shall, at a minimum:

(a) Conform to generally accepted appraisal standards as evidenced by the Uniform Standards of Professional Appraisal Practice (USPAP)
promulgated by the Appraisal Standards Board of the Appraisal Foundation, 1029 Vermont Ave., NW., Washington, DC 20005, unless
principles of safe and sound banking require compliance with stricter standards;

(b) Be written and contain sufficient information and analysis to support the institution's decision to engage in the transaction;

(c) Analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market
lease terms, and tract developments with unsold units;

(d) Be based upon the definition of market value as set forth in this subpart; and

(e) Be performed by State licensed or certified appraisers in accordance with requirements set forth in this subpart.

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#255229 - 10/12/04 08:09 PM Re: Help! Appraisal Reviews for Loans Over $1 Million
Johncrcm Offline
100 Club
Joined: Dec 2002
Posts: 195
Eastern KY
You may provide me your email and I will sent my exam matrix if you need it.

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