Appraisal

Is anyone aware of a state law that prohibits closing on a commercial loan without a completed appraisal in house? The appraisal will be forthcoming. It is thought by our senior lender that years ago he was cited for closing on a residential construction loan without an appraisal but the loan remained unfunded until the appraisal was receivedThanks for any help.

State law, I doubt it, but your safety and soundness examiners are going to be all over you. How can you make a loan and not know the value of the collateral?

Agree with rlcarey above. The Interagency Guidelines state in Part XV. Reviewing Appraisals and Evaluations, "... As part of the credit approval process and prior to a final credit decision, an institution should review appraisals and evaluations to ensure that they comply with the Agencies' appraisal regulations and are consistent with supervisory guidance and its own internal policies." By the letter of the Guidelines, the appraisal should be received and reviewed prior to approving the deal, let alone closing it.