Martens Appraisals

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 are bank regulations that resulted from the Savings & Loan crisis that occurred in the 1980's. When bank examiners found inflated appraisals prepared by unethical appraisers, they wrote into law that if an appraisal is to be utilized by a federally insured financial institution, the bank - not the borrower - shall be the client of the appraiser [Title 12 of the Code of Federal Regulations]. The intent of this law is to help insure that the appraiser's role is that of an unbiased third-party.

A bank cannot legally accept an appraisal that was not prepared for a financial institution, and it is unethical for the appraiser to prepare an appraisal for an individual knowing that the intent is to utilize the appraisal to document the collateral value of a loan for a federally insured financial institution.



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