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A LENDER’S GUIDE TO COMMERCIAL APPRAISALS Introduction to Regulations and Procedures This Power Point Presentation Comes with the Following: A. A CD that contains all of the written materials you see here (in WORD format) Plus the Power Point Presentation B. A copy of the Power Point Presentation Slides C. A Video Script for use by a Leader or Presenter D. A Leader’s Guide to the Presentation (The program can be presented by a Credit Officer or Knowledgeable Real Estate Lender or it can be implemented in a selfinstructional format) E. A short Self-Assessment for participants to test their knowledge after the presentation, along with an answer key F. Copies of the current Federal Regulations that pertain to Real Estate Appraisals (FIRREA; BC 94-55; Joint Statement on Appraisal Independence issued 10/28/03; and the Joint Statement on Frequently Asked Questions issued 3/22/05) Order Your Bank’s Copy Today from Evaluation And Review Associates, Inc. Call 301-570-3394 or Print and Fill Out the Form Below Annual Subscriptions and Updates are Available COST: $395.00
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A LENDER’S GUIDE TO COMMERCIAL APPRAISALS Introduction to Regulations and Procedures
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SAMPLE PAGE FROM POWER POINT PRESENTATION Slide 2 – Outline A LENDER’S GUIDE TO COMMERCIAL APPRAISALS Introduction to Regulations and Procedures OUTLINE
REGULATORY
ENVIRONMENT
FIRREA FIRREA INTERPRETATIONS USPAP
APPRAISAL
OPTIONS
Complete Vs Limited Self-Contained Vs Summary Vs Restricted Departure And Ordering Appraisals
THE
THREE TRADITIONAL APPROACHES TO VALUE
Cost, Sales Comparison, and Income Capitalization Relying on the Most Appropriate Approach Direct Capitalization Vs. Discounted Cash Flow (DCF)
APPRAISAL
REVIEW
Top 10 Appraisal Review Findings
SAMPLE PAGE FROM LEADER’S SCRIPT
Slide 1 – A Lender’s Guide to Commercial Appraisals
Welcome to the XYZ Bank Commercial Appraisal Orientation Program. This program was developed to familiarize you with basic commercial appraisal regulations and procedures. At XYZ Bank, it is our intention to comply with all banking regulations that pertain to appraisal ordering and review. Your participation is a critical factor in achieving that goal. This is a presentation on basic Appraisal Regulations and Procedures. By the end of the presentation, you should be able to: 1. Name the primary Banking Law that governs appraisals (FIRREA) 2. Describe the subsequent interpretations of FIRREA 3. Understand there are six different types of appraisals 4. Know what makes an appraisal “Limited” 5. State the set of procedures that govern appraisers (USPAP) 6. Identify the most appropriate type of appraisal most lenders should order 7. Describe the three traditional approaches to real estate valuation 8. State when direct capitalization is appropriate and when discounted cash flow analysis is appropriate 9. Identify some typical appraisal review issues In the late 1980’s Federal Regulators set out some very specific guidelines for ordering appraisals. This was a result of poor bank appraisal practices and borrower abuses. The set of regulations developed is known as FIRREA (which stands for the Financial Institutions Reform, Recovery and Enforcement Act). FIRREA established how and when an appraisal should be ordered.
Slide 2 - Outline
Slide 3 – Regulatory Environment