Lenders Face New Set of Rules for Real Estate Appraisal

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Negotiating a business loan can be a nerve-racking experience. Lenders want to calculate the value of assets cautiously, to reduce their risk. Borrowers jockey for optimistic numbers, to get the money to make the deal work.

Appraisers have been left with the role of umpire to determine the real value. For years, the middleman method worked well - despite fluctuating markets and nearly a dozen different ways to value property.

Then, in the 1980s, the feeding frenzy of speculation in the real estate market eventually toppled hundreds of the nation's savings and loans.

On the Overhaul Bandwagon

A ripple of reform evolved into a full-scale of the real estate appraisal process. Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act, calling for minimum standards of conduct on appraisals.

The Appraisal Foundation, comprising eight appraisal organizations, complied by developing the Uniform Standards of Professional …