(a)General. The general requirements for an appraisal are:
(1)Value of collateral. The lender is responsible for ensuring that the value of chattel and real estate pledged as collateral is sufficient to fully secure the guaranteed loan.
(2)Additional security. The lender is not required to complete an appraisal or evaluation of collateral that will serve as additional security, but the lender must provide an estimated value.
(3)Appraisal cost. Except for authorized liquidation expenses, the lender is responsible for all appraisal costs, which may be passed on to the borrower or transferee in the case of a transfer and assumption.
(b)Chattel security. The requirements for chattel appraisals are:
(1)Need for chattel appraisal. A current appraisal (not more than 12 months old) of primary chattel security is required on all loans except loans or lines of credit for annual production purposes secured by crops, which require an appraisal only when the guarantee is requested late in the current production year and actual yields can be reasonably estimated. An appraisal is not required for loans of $50,000 or less if a strong equity position exists.
(2)Basis of value. The appraised value of chattel property will be based on public sales of the same or similar property in the market area. In the absence of such public sales, reputable publications reflecting market values may be used.
(3)Appraisal form. Appraisal reports may be on the Agency's appraisal of chattel property form or on any other appraisal form containing at least the same information.
(4)Experience and training. Chattel appraisals will be performed by appraisers who possess sufficient experience or training to establish market (not retail) values as determined by the Agency.
(c)Real estate security. The requirements for real estate appraisals are:
(1)Loans of $250,000 or less. The lender must document the value of the real estate by applying the same policies and procedures as their non-guaranteed loans.
(2)Loans greater than $250,000. The lender must document the value of real estate using a current appraisal (not more than 12 months old) completed by a State Certified General Appraiser. Real estate appraisals must be completed in accordance with USPAP. Restricted reports as defined in USPAP are not acceptable. The Agency may allow an appraisal more than 12 months old to be used only if documentation provided by the lender reflects each of the following:
(i) Market conditions have remained stable or improved based on sales of similar properties,
(ii) The property in question remains in the same or better condition, and
(iii) The value of the property has remained the same or increased.
(3) Agency determinations under paragraph (c)(2) of this section to permit appraisals more than 12 months old are not appealable.