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ALEXANDRIA, Va.-NCUA recently issued a Letter to Credit Unions (03-CU-17) reminding credit unions to ensure that an independent appraiser conducts real estate appraisals and evaluations. NCUA and the other Federal Financial Institution Examination Council members issued a joint statement on appraisals for all real estate related financial transactions. For credit unions, the letter seeks to clarify 722.5 of NCUA’s Rules and Regulations. “The credit union’s board of directors is responsible for reviewing and adopting policies and procedures that establish and maintain an effective, independent real estate appraisal and evaluation program for all of its lending functions,” the letter read. “Credit unions engaged in real estate-related activities should take measures to ensure that their program includes the independent selection of qualified, experienced, and educated individuals to appraise or evaluate real estate collateral,” NCUA’s letter continued. “These individuals must be independent of the transaction and not subject to external or internal influence. Furthermore, an individual not involved in the loan production should select the appraiser or evaluator. Finally, a qualified and trained individual who is not involved in loan production should review the reports.” Though NCUA was not involved in establishing the Interagency Appraisal and Evaluation Guidelines, which was attached to the Letter to Credit Unions, several years ago when they were written, “most of the content provides pertinent and valuable guidance for credit unions.”

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