Appraisal/Valuation Independence

Section 1026.42 of Regulation Z requires valuation independence in any open or closed-end consumer credit transaction secured by the borrower’s principal residence. The purpose behind this is to …ensure that real estate appraisals used to support creditors’ underwriting decisions are based on the appraiser’s independent professional judgment, free of any influence or pressure that may be exerted by parties that have an interest in the transaction. In other words, a financial institution cannot influence someone (internal or external) to ensure an appraisal or valuation comes back at a certain amount. There also can’t be any conflicts of interest, for example, where someone might have a direct or indirect interest in the property or the transaction itself. While there is a safe harbor, it depends on your institution’s asset size.

Jerod explains more in the video.

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Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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