Ask Henry

2055 VS Full Appraisal

Dear Henry,

I work at a community bank and am new to appraisal review. We are getting very unclear information from our examiners as to what we need for a residential appraisal. Up until recently, they accepted a BPO (Broker Price Opinion) for a routine (yearly) value update on loans under $500,000. Now a different examiner states that BPOs are not acceptable, and requires that we get a full appraisal for everything with a mortgage balance over $250,000.
One examiner told us that all residential appraisals must be made according to USPAP. In trying to reduce our ridiculous costs in having to order a brand new appraisal for every residential annual value update, a few appraisers have submitted their reports on Form 2055 (basic drive-by). This form cannot meet USPAP in its brevity. Do you know if the OCC will accept a Form 2055 for a residential valuation update? And do you have any recommended websites where I can search for additional information on the uses of the various residential appraisal forms? 

Thank you in advance for your help,
Mary F Miron

Dear Mary,

There is nothing in the USPAP that specifies what type of appraisal report the appraiser must use. Therefore, this is something your institution must determine based on their needs and requirements. They must comply with all their regulators' requirements.  I sympathize with their dilemma. As far as your statement that an appraisal report on the Form 2055 "cannot meet USPAP requirements in its brevity", that's just not the case. An appraisal reported on the 2055 still must meet all USPAP requirements. The choice of the form does not dictate the comprehensiveness of the appraisal itself.