ALEXANDRIA, Va. — A recent question about documentation in a real estate transaction prompted the NCUA to issue additional guidance on real estate. According to NCUA Legal Opinion Letter 08-0129, no written narrative needs to be present in an appraisal for a real-estate transaction. NCUA's appraisal regulation, discusses real estate transactions requiring appraisals and the types of appraisals required for certain categories of real estate transactions.
However, although it is not required in an appraisal document, NCUA does recommend the practice.
In 2005, NCUA, along with the other federal financial institution regulators, issued joint guidance on appraisals and the evaluation function in the form of questions and answers. NCUA issued the guidance Frequently Asked Questions on Independent Appraisal and Evaluation Functions (05-CU-06); (March 2005).
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In the 2005 guidance, the question was posed as to whether an appraisal should undergo a "compliance review."
NCUA provided the following answer: "[P]rior to a final credit decision, regulated institutions should perform a compliance review on all appraisals to confirm that they comply with the minimum appraisal standards as outlined in the agencies' appraisal regulations, the interagency guidelines, and the independence statement. Loan administration files should document this compliance review, which may be in checklist or narrative format. In addition, certain appraisals should be reviewed more comprehensively to assess the technical quality of the appraiser's analysis prior to making a final credit decision."
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