ALEXANDRIA, Va. — NCUA issued a legal opinion letter stating that an automated valuation of real property does not meet the requirement for an appraisal by a state-certified or licensed appraiser for all real estate-related transactions with nine exceptions.
Two of these financial transactions, while exempted from the formal appraisal requirement, are still required to provide a "written estimate of value." They are a second mortgage under $250,000 and refinancing with no additional extension of credit.
"While AVM technology can augment the appraisal process, it is not a substitute for an appraisal or independent valuation," Legal Opinion Letter 06-0824, signed by NCUA Associate General Counsel Sheila Albin, read. "An AVM obviously does not meet the requirement for an appraisal by a state-certified or licensed appraiser, and our opinion is a credit union cannot rely solely on the value an AVM provides to meet the requirement of a written estimate of value. The appraisal rule contemplates the involvement of an experienced, disinterested individual who prepares the written estimate of value."
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