The Appraisal Groups have written a letter to the FDIC asking them to prohibit the use of Broker Price Opinions in the FDIC’s new Loss Sharing Proposal.
In a November 19 letter, the Appraisal Institute strongly urged the Federal Deposit Insurance Corporation to require the use of appraisals performed by licensed or certified appraisers as part of its program, Loss Sharing Proposal to Promote Affordable Loan Modifications. Currently, the program permits the use of broker’s price opinions to ascertain loan-to-value ratios as part of the modification of “underwater loans” – loans where the value of the collateral is less than the loan amount – that are in default.
The issue of BPO’s is a sticky one. Many states outlaw the use of BPO’s, and yet, they are still used quite frequently by banks.