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Bank Examination & Appraisal

Legislation (H.R. 1553 / S. 727) has been introduced in Congress which intends to promote consistency of bank examinations and due process, and enhance consistency in the interpretation and understanding of bank examination guidelines and regulations. Within the realm of appraisal, bank appraisal departments and appraisers themselves have often faced inconsistent interpretations of the Interagency Appraisal and Evaluation Guidelines and other applicable guidelines. For instance, the area of “subsequent transactions” (modifications, refinancings, etc.) is confusing and has seen inconsistent statements from the regulators, some contending that an appraisal is required when there is a material change in market conditions, when the Guidelines themselves determine something different.

The Appraisal Institute supports the overall goals of consistency and due process, but we fear the legislation will unnecessarily tie the hands of bank examiners in protecting safety and soundness, by prohibiting any reappraisal of a performing loan even if examiners identified safety and soundness concerns. Federal bank regulatory agencies have retained the right to order new appraisals to protect safety and soundness for many decades. We do not believe that federal bank examiners should have their “hands tied” on issues of fundamental importance to safety and soundness. 

AI-ASFMRA Joint Statement for the Record on H.R. 3461 - the Financial Institutions Examination Fairness and Reform Act (H.R. 1553 / S. 727)

Appraisal Institute Talking Points on Financial Institutions Examination Fairness and Reform Act 

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