Q: Can a staff appraiser or an appraisal company affiliated with the financial institution be considered independent, since the financial institution compensates them?
A: Yes, if a staff appraiser prepares an appraisal, that appraiser must be independent of the loan production function and not involved in the approval of the transaction.49 Staff appraisers must not have any direct or indirect interest in the property or transaction.50 Likewise, when fee appraisers from an affiliated appraisal company prepare appraisals, such fee appraisers must not have any direct or indirect interest in the property or transaction.51 For transactions subject to the IFR on Valuation Independence, institutions must refer to that rule for the circumstances under which a staff appraiser or appraisal company affiliated with the creditor would not be considered to have a conflict of interest based on the person’s employment or affiliate relationship with the creditor.52
49 OCC: 12 CFR 34.45(a); Board: 12 CFR 225.65(a); and FDIC: 12 CFR 323.5(a).
51 OCC: 12 CFR 34.45(b)(1); Board: 12 CFR 225.65(b)(1); and FDIC: 12 CFR 323.5(b)(1).
52 See Board: 12 CFR 226.42(d) and BCFP: 12 CFR 1026.42(d).