[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR614.4260]



[Page 119-120]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 614_LOAN POLICIES AND OPERATIONS--Table of Contents

 

              Subpart F_Collateral Evaluation Requirements

 

Sec. 614.4260  Evaluation requirements.



    (a) Valuation. Valuations of personal and intangible property, as 

well as real property exempted under paragraph (c) of this section, 

shall be performed by qualified individuals who meet the established 

standards of this subpart and the Farm Credit System institution 

obtaining the collateral valuation.

    (b) Appraisal. (1) Appraisals for real estate-related financial 

transactions with transaction values of more than $250,000 shall be 

performed by a qualified appraiser who is a State licensed or a State 

certified real estate appraiser.

    (2) Appraisals for real estate-related financial transactions with 

transaction values of more than $1,000,000 shall be performed by a 

qualified appraiser who



[[Page 120]]



is a State certified real estate appraiser.

    (c) Appraisals not required. An appraisal performed by a State 

certified or State licensed appraiser is not required for any real 

estate-related financial transaction in which any of the following 

conditions are met:

    (1) The transaction value is $250,000 or less;

    (2) The transaction is a ``business loan'' as defined in Sec. 

614.4240(e) that:

    (i) Has a transaction value of $1,000,000 or less; and

    (ii) Is not dependent on income derived from the sale or cash rental 

of real estate as the primary source of repayment;

    (3) A lien on real property has been taken as collateral in an 

abundance of caution, and the application, when evaluated on the five 

basic credit factors, without considering the subject real estate, would 

support the credit decision that was based on other sources of repayment 

or collateral;

    (4) A lien on real estate is not statutorily required and has been 

taken for purposes other than the real estate's value;

    (5) Subsequent loan transactions (which include but are not limited 

to loan servicing actions, reamortizations, modifications of loan terms, 

and partial releases), provided that either:

    (i) The transaction does not involve the advancement of new loan 

funds other than funds necessary to cover reasonable closing costs; or

    (ii) There has been no obvious and material change in market 

conditions or physical aspects of the property that threatens the 

adequacy of the Farm Credit System institution's real estate collateral 

protection, even with the advancement of new loan funds;

    (6) A Farm Credit System institution purchases a loan or an interest 

in a loan, pool of loans, or interests in real property, including 

mortgage-backed securities, provided that:

    (i) The appraisal prepared for each loan, pooled loan, or real 

property interest, when originated, met the standards of this subpart, 

other Federal regulations adopted pursuant to FIRREA, or the 

requirements of the government-sponsored secondary market intermediaries 

under whose auspices the interest is sold; and

    (ii) There has been no obvious and material change in market 

conditions or physical aspects of the property that would threaten the 

Farm Credit System institution's collateral position, or

    (7) A Farm Credit System institution makes or purchases a loan 

secured by real estate, which loan is guaranteed by an agency of the 

United States Government and is supported by an appraisal that conforms 

to the requirements of the guaranteeing agency.

    To qualify for exceptions in paragraphs (c)(1) through (c)(7) of 

this section from the requirements of this subpart, the institution must 

have documentation justifying the use of such exceptions in the 

applicable loan file(s). In addition, the institution must document that 

the repayment of a ``business loan'' is not dependent on income derived 

from the sale or cash rental of real estate.

    (d) FCA-required appraisals. The FCA reserves the right to require 

an appraisal under this subpart whenever it believes it is necessary to 

address safety and soundness issues.

    (e) Reciprocity. The requirements of this subpart are satisfied by 

the use of State certified or State licensed appraisers from any State 

provided that:

    (1) The appraiser is qualified to perform such appraisals;

    (2) The applicable Farm Credit System institution has established 

policies providing for such interstate appraisals; and

    (3) The applicable State appraiser licensing and certification 

agency recognizes the certification or license of the appraiser's State 

of permanent certification or licensure.



[59 FR 46730, Sept. 12, 1994, as amended at 60 FR 2687, Jan. 11, 1995]