Q: May a financial institution accept an appraisal prepared by an appraiser who was engaged by the loan broker for the transaction?
A: The agencies’ appraisal regulations allow a financial institution to accept an appraisal prepared by an appraiser engaged by another financial services institution, including a loan broker,53 as long as the appraiser has no direct or indirect interest, financial or otherwise, in the property or transaction and the appraisal conforms to the requirements of the regulations and is otherwise acceptable. Financial institutions should review broker-ordered appraisals thoroughly to confirm that the appraisal complies with the regulations and meets the quality standards required by the financial institution’s appraisal policies. For transactions subject to the IFR on Valuation Independence, institutions must refer to that rule for the circumstances under which the loan broker ordering the appraisal would not be considered to have a conflict of interest as a result of performing multiple settlement services for the transaction.54
53 Valuation Guidelines, Appendix D.
54 See Board: 12 CFR 226.42(d); BCFP: 12 CFR 1026.42(d).