ALEXANDRIA, Va.-NCUA recently issued a Letter to Credit Unions(03-CU-17) reminding credit unions to ensure that an independentappraiser conducts real estate appraisals and evaluations. NCUA andthe other Federal Financial Institution Examination Council membersissued a joint statement on appraisals for all real estate relatedfinancial transactions. For credit unions, the letter seeks toclarify 722.5 of NCUA's Rules and Regulations. "The credit union'sboard of directors is responsible for reviewing and adoptingpolicies and procedures that establish and maintain an effective,independent real estate appraisal and evaluation program for all ofits lending functions," the letter read. "Credit unions engaged inreal estate-related activities should take measures to ensure thattheir program includes the independent selection of qualified,experienced, and educated individuals to appraise or evaluate realestate collateral," NCUA's letter continued. "These individualsmust be independent of the transaction and not subject to externalor internal influence. Furthermore, an individual not involved inthe loan production should select the appraiser or evaluator.Finally, a qualified and trained individual who is not involved inloan production should review the reports." Though NCUA was notinvolved in establishing the Interagency Appraisal and EvaluationGuidelines, which was attached to the Letter to Credit Unions,several years ago when they were written, "most of the contentprovides pertinent and valuable guidance for credit unions."

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