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CUNA suggests changes to appraisal guidance
WASHINGTON (1/22/09)—Credit unions are prudent real estate lenders and already apply necessary safeguards to ensure the integrity of the appraisal process, said the Credit Union Association (CUNA) commenting on proposed interagency appraisal guidelines. The National Credit Union Administration (NCUA), along with federal bank and thrift regulators, proposed interagency appraisal and evaluation guidelines in December that outline supervisory expectations for sound real estate practices. In its comment letter, CUNA noted that although many credit unions have been affected by the current economic crisis, their long-standing careful lending practices helped them avoid making many of the types of loans that have often been cited as a cause of the crisis. “For this reason, we are confident that credit unions have been and are continuing to take the necessary safeguards to ensure the integrity of the appraisal process and that they are meeting the expectations outlined in the guidelines,” wrote CUNA Senior Assistant General Counsel Jeffrey Bloch in CUNA’s comment letter. However, the CUNA letter noted, credit unions have raised a number of issues with the guidelines. CUNA suggested changes be adopted before the National Credit Union Administration (NCUA) and other federal financial regulators adopt the guidance. For instance, CUNA urged the regulators to consider whether lenders should have more flexibility in determining whether there must be an appraisal or valuation for every loan modification, particularly if an appraisal that is consistent with these Guidelines was obtained for the original loan. CUNA also recommended that final guidelines should clarify to what its definition of “appraisal” refers. It should define the extent to which the definition refers only to full-scale interior inspections and to the extent it could also include exterior-only inspections, commonly referred to as “drive-by” appraisals. Also, CUNA noted, the proposed guidelines indicate that a lending institution should discuss its needs and expectations with an appraiser. "We do not believe this is either practical or realistic and does not reflect current business practices, at least for larger credit unions and other financial institutions,” CUNA wrote. To read more of CUNA’s extensive comment, use the resource link below.


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