A second bite at the appraisal apple; Credit card submissions due Friday
Sometimes you just want a second opinion – like when you’ve received questionable investment advice from a relative or a medical diagnosis from the internet, or when a friend tells you it would be “weird” to write a crime novel about a credit union titled “Bylaw and Order.” Credit unions may want to seek a second opinion sometimes too – such as when they receive a deficient real estate appraisal.
For those who need a refresher, part 722 of the National Credit Union Administration (NCUA) regulations provides the rules applicable to real estate appraisals. Section 722.3(c) requires a formal appraisal by either a state-certified appraiser or a state-licensed appraiser for residential real estate transactions in which $400,000 or more of the transaction is not insured or guaranteed by a U.S. government agency or government-sponsored agency. State-certified appraisers are subject to more stringent requirements than their state-licensed counterparts. The regulation specifically requires a state-certified appraiser if the transaction is a complex residential real estate transaction or if the value of the transaction is $1 million or more (including non-residential real estate).
NCUA and other regulators issued this 2010 Interagency Appraisal and Evaluation Guidance, which notes that credit unions should review appraisals to ensure they comply with applicable regulations, appraisal standards, and the credit union’s own policies. The guidance states the review should determine if the conclusions are appropriate and well-supported, and that credit unions may also use the review to evaluate the competency of the original appraiser.
The guidance notes that a credit union should not influence the outcome of an appraisal. Merely disagreeing with the value stated on an appraisal is not enough to warrant a second opinion. Instead, a second opinion may be justified where there are “significant deficiencies” in the original appraisal that need to be addressed. As for obtaining a second opinion, the guidance provides two possible methods. The guidance states credit unions should establish policies and procedures for addressing appraisal inaccuracies and weaknesses identified through the review. This may include:
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