Q: If a financial institution engages in a FRT with an intermediate lender, such as a warehouse lender, in which the financial institution extends credit to the intermediate lender collateralized by the intermediate lender’s real estate-related transactions with third parties, can the financial institution accept appraisals ordered by the intermediate lender to support the value of the underlying real estate collateral?
A: Yes, the financial institution may accept the appraisals from the intermediate lender, provided the intermediate lender is a financial services institution,42 the appraiser has no direct or indirect interest in the property or the transaction, and the other requirements of the appraisal regulations are fulfilled.43
42 See Valuation Guidelines, Appendix D.
43 OCC: 12 CFR 34.45(b)(2); Board: 12 CFR 225.65(b)(2); and FDIC: 12 CFR 323.5(b)(2). Although the agencies’ appraisal regulations do not specifically define “financial services institution,” the term is intended to describe entities that provide services in connection with real estate lending transactions on an ongoing basis, including loan brokers. See Valuation Guidelines, Appendix D.