Scenario: new $50,000 loan request, secured by a second lien on an apartment building (behind our first lien). Existing note amount is over $900,000. Original appraisal was dated 5/15/15 and valued property at $1,221,000.
Do we have to get a new appraisal, or would it be appropriate/legal to send and engagement letter to the original appraiser and have him recertify the value and show that the value has not changed on the property?
You can use an old appraisal, you just have to validate it. Sending it to the appraiser to re-certify is certainly acceptable.
XIV. Validity of Appraisals and Evaluations
The Agencies allow an institution to use an existing appraisal or evaluation to support a subsequent transaction in certain circumstances. Therefore, an institution should establish criteria for assessing whether an existing appraisal or evaluation continues to reflect the market value of the property (that is, remains valid). Such criteria will vary depending upon the condition of the property and the marketplace, and the nature of the transaction. The documentation in the credit file should provide the facts and analysis to support the institution's conclusion that the existing appraisal or evaluation may be used in the subsequent transaction. A new appraisal or evaluation is necessary if the originally reported market value has changed due to factors such as:
Compliance Alliance offers a comprehensive suite of compliance management solutions.
To learn how to put them to work for your bank, call (888) 353-3933 or email email@example.com.