We do not believe that it is illegal to use an existing appraisal transferred from another lender for a new loan, provided that the appraisal “conforms to the Board’s appraisal regulations and is otherwise acceptable.” FRB Commercial Bank Examination Manual, Section 4140.1, p. 12Interagency FAQ # 10, FRB Supervisory Letter SR 05-5 (March 22, 2005) (the FAQ continues to be in effect under the 2010 Interagency Appraisal and Evaluation Guidelines, see 75 Fed. Reg. 77450, 77455–77456 (December 10, 2010)). The appraisal should comply with your internal policies and procedures regarding appraisals (for example, use of an approved appraisers list and written engagement letters) and, if applicable, the Regulation Z loan appraisal requirements (12 CFR 1026.42). Loans that are insured by the FHA, that are sold to a government-sponsored enterprise (Fannie or Freddie), or that are considered “higher-risk mortgages” under 15 USC 1639h(f) (as distinct from the definition of a “high-cost mortgage” under 15 USC 1602(aa)), may also be subject to additional appraisal requirements.

Before using an existing appraisal, you must “establish criteria for assessing whether an existing appraisal or evaluation continues to reflect the market value of the property,” which should include the Board’s suggested criteria (passage of time, market volatility, loan terms, etc.). FRB Commercial Bank Examination Manual, Section 4140.1, p. 10. Before making a final credit decision, you must also review the appraisal as you would any other appraisal. FRB Commercial Bank Examination Manual, Section 4140.1, p. 12.The credit file should include documentation of the appraisal review and “the facts and analysis to support” your decision to use an existing appraisal. FRB Commercial Bank Examination Manual, Section 4140.1, p. 10.

Among other considerations, an institution should confirm that

— the appraiser was engaged directly by the other financial services institution;

— the appraiser had no direct, indirect, or prospective interest, financial or otherwise, in the property or transaction; and

— the financial services institution (not the borrower) ordered the appraisal. For example, an engagement letter should show that the financial services institution, not the borrower, engaged the appraiser.

An institution must not accept an appraisal that has been readdressed or altered by the appraiser with the intent to conceal the original client.

FRB Commercial Bank Examination Manual, Section 4140.1, p. 12.