We have a Mortgage Department with several people in the department and only one that has his lending license.

All the appraisals being done for this department are through an appraisal corporation who happens to be the wife of the only licensed loan officer.

Is there a conflict of interest issue? Are there any other regulatory issues with this situation?

PLEASE HELP!!!

I would say yes on both accounts, especially if he has anythting to do with the corporation (Section 8 of RESPA comes to mind). This is definitely a situation I'd be investingating further as to why all the appraisals are being done by this officer's spouse and making senior management aware of the situation (if they aren't already).

I did address the issue with them. They said Loan Officer is not an officer of the appraisal corporation. I didn't see any form for Affiliated Business Arrangement in the file and the department said that the appraiser discloses the relationship. There was no documentation in the files. They disagree that there is a conflict and it will remain in my report to the board of directors along with the comments. That's all I can do.

Sounds like you have done all you can at this point. I still think this is a problem with "all" the appraisals going to the one appraiser (maybe like a required provider in this case). Anyway, if and when the examiners question this practice let your management people answer why they ignored your comments.