2003-9.txt
AL 2003-9
Advisory Letter 

Subject:   Independent Appraisal and Evaluation Functions

Date: October 28, 2003
                                                                      
TO:  Chief Executive Officers of All National Banks and National
     Bank Operating Subsidiaries, Department and Division Heads,
     and All Examining Personnel

The Office of the Comptroller of the Currency (OCC), the Board of
Governors of the Federal Reserve System (FRB), the Federal
Deposit Insurance Corporation (FDIC), the Office of Thrift
Supervision (OTS), and the National Credit Union Administration
(NCUA) (the Agencies) are jointly issuing the attached statement
to address concerns identified during examinations about the
independence of the collateral valuation process.

This statement clarifies and reminds banks of the existing
standards for independence within the appraisal and real estate
lending regulations and the Interagency Appraisal and Evaluation
Guidelines.  It applies to all real estate-related financial
transactions originated or purchased by a national bank or
operating subsidiary for its own portfolio or as assets held for
sale.

Banks are reminded that the board of directors is responsible for
ensuring that policies and procedures are adopted that establish
an effective, independent real estate appraisal and evaluation
program that covers all lending functions.  A key element of the
program must be the independent selection of qualified and
experienced individuals to appraise or evaluate real estate.  The
individuals selected also must be independent of the transaction,
and not subject to external or internal influence.  Finally, a
qualified individual who is not involved in loan production
should review the reports.

For further information concerning the matters discussed in this
advisory letter or the attachment, please contact the Credit Risk
Division at (202) 874-5170 or your supervisory office.




_____________________________
Barbara J. Grunkemeyer
Deputy Comptroller for Credit Risk

Attachment: [http://www.occ.treas.gov/ftp/advsory/2003-9a.pdf]