Q: When engaging in a renewal transaction, how can a financial institution document the validity of an existing appraisal or evaluation?
A: A financial institution should document the assessment of the validity of an existing appraisal or evaluation in the credit file. The documentation should detail the facts and analysis to support the financial institution’s determination that the market value conclusion of the collateral can be used to support the subsequent transaction. The level of detail for the assessment of the validity of appraisals or evaluations in the credit file could vary in accordance with the transaction type. For example, documentation for a renewal of a residential mortgage loan may be less detailed than for a residential tract development loan or commercial property.