I can’t count the number of times I’ve received calls from a bank asking me to readdress a commercial appraisal report. What the caller doesn’t realize is that things just aren’t that easy. This situation arises most often when a borrower begins the loan process with one bank and, after paying for an appraisal, switches lenders. I explain to the caller that readdressing the report to a new bank would violate the appraiser’s obligation to the first bank to keep the assignment results confidential. But I don’t leave them hanging.
That’s when I offer the first tip that could save your bank money.
- Subject to certain conditions, Interagency Appraisal and Evaluation Guidelines (rules published by the feds that regulate federally related loan transaction) allow banks to use commercial appraisal reports addressed to other lending institutions.
Here’s a quote from the guide:
“An institution or its agent must directly
select and engage appraisers. The only exception to this requirement
is that the Agencies’ appraisal regulations allow an institution to use an appraisal prepared for another financial services institution provided certain conditions are met.”
For the sake of brevity, I won’t get into those conditions. Suffice it to say that it would save money for the lending institution and ultimately, the consumer who typically pays for the appraisal.
The second money saving tip relates to the refinancing of assets already held as collateral by the lending institution. Here’s the tip in a nutshell:
- In order to comply with current banking regulations, lenders must regularly reassess the value of their collateral. Many banks, and appraisers also, are unaware that a full-blown appraisal is not always necessary. In some cases, an evaluation would suffice.
Here’s what the Guide has to say:
“The Agencies’ appraisal regulations permit an institution
to obtain an appropriate evaluation of real property collateral in lieu of an appraisal for transactions that qualify for certain exemptions.”
Notably, the transaction value must be less than or equal to $250,000 (among other conditions that must be met).
Our team is on a quest to deliver greater value to your lending institution and help maximize your ROI. We hope these are two tips you can implement to save you, and your client, money.