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I have a unique situation with regards to an appraisal and I have a few questions about this situation. We have a customer that approached a lender asking for a list of approved appraisers to get an appraisal done on their home. He paid cash for the home when he purchased it and an appraisal was not completed for his purchase. He may or may not want to use this home as collateral for a future loan with us. He’s still undecided about that and there has been no application submitted for a loan as of now.
1. Can the lender provide a list of the banks approved appraisers to a customer who wants to obtain the appraisal on their own if there is no loan application submitted?
2. If the customer gets an appraisal from one of the banks approved appraisers and comes back to the bank later for a loan using that piece of property as collateral, can the bank use that appraisal to consider value or the property? Or, would it be considered bias since they received a list of appraisers from the bank?
3. Would we be better off to tell the customer that we can’t recommend an appraiser as they are usually ordered by the financial institutions?
4. Can we order an appraisal for them without a loan in progress if the customer pays out of pocket? If so, and the borrower comes back to the bank later for a loan application, would we be able to use that appraisal to consider valuation of the property?Thank you,
1. Can the lender provide a list of the banks approved appraisers to a customer who wants to obtain the appraisal on their own if there is no loan application submitted?
Answer – There is no regulation/law that states you may not give a borrower your approved appraiser list regardless of a loan application. This would be a business decision and one you would want to document in policy so if asked again that customer would receive the same response and treatment.
2. If the customer gets an appraisal from one of the banks approved appraisers and comes back to the bank later for a loan using that piece of property as collateral, can the bank use that appraisal to consider value or the property? Or, would it be considered bias since they received a list of appraisers from the bank?
Answer – No, you cannot use the appraisal without the appraiser assigning it to your FI. As with any appraisal being reused by anyone/financial institution you have to have the original requester’s permission and assignment of it by the appraiser/appraisal company that performed it.
3. Would we be better off to tell the customer that we can’t recommend an appraiser as they are usually ordered by the financial institutions?
Answer – This would need to be a business decision by the Bank and one that is written into policy so if asked again that customer would receive the same response and treatment.
4. Can we order an appraisal for them without a loan in progress if the customer pays out of pocket? If so, and the borrower comes back to the bank later for a loan application, would we be able to use that appraisal to consider valuation of the property?
Answer – No, all regulatory language indicates that an FI can only order an appraisal in connection with “federally related transactions. Additionally, FIs are required to have real estate lending regulations and guidelines, that require written real estate lending policies that are consistent with principles of safety and soundness and that reflect consideration of the real estate lending.
IMO, based off this regulatory language if you do not have an application you cannot order the appraisal.
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