[Code of Federal Regulations]

[Title 7, Volume 7]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR762.127]



[Page 144-145]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.127  Appraisal requirements.



    (a) General. The Agency may require a lender to obtain an appraisal 

based on the type of security, loan size, and whether it is primary or 

additional security. Except for authorized liquidation expenses, the 

lender is responsible for all appraisal costs, which may be passed on to 

the borrower, or a transferee in the case of a transfer and assumption.

    (b) Exception. Notwithstanding other provisions of this section, an 

appraisal is not required for any additional security, or for loans of 

$50,000 or less if a strong equity position exists.

    (c) Chattel appraisals. A current appraisal (not more than 12 months 

old) of primary chattel security is generally required on all loans. An 

appraisal for loans or lines of credit for annual production purposes 

that are secured by crops is only required when a guarantee is requested 

late in the current production year and actual yields can be reasonably 

estimated. 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. 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. Chattel appraisals will be 

performed by appraisers who possess sufficient experience or training to 

establish market (not retail) values as determined by the Agency.

    (d) Real estate appraisals. A current real estate appraisal is 

required when



[[Page 145]]



real estate will be primary security. Agency officials may accept an 

appraisal that is not current if there have been no significant changes 

in the market or on the subject real estate and the appraisal was either 

completed within the past 12 months or updated by a qualified appraisal 

if not completed within the past 12 months.

    (1) Appraiser qualifications. On loan transactions of $250,000 or 

less, the lender must demonstrate to the Agency's satisfaction that the 

appraiser possesses sufficient experience or training to estimate the 

market value of agricultural property. On loan transactions greater than 

$250,000, which includes principal plus accrued interest through the 

closing date, the appraisal must be completed by a State certified 

general appraiser.

    (2) Appraisals. Real estate appraisals must be completed in 

accordance with the Uniform Standards of Professional Appraisal 

Practice. Appraisals may be either a complete or limited appraisal 

provided in a self-contained or summary format. Restricted reports, as 

defined in the Uniform Standards of Professional Appraisal Practice, are 

not acceptable.



[64 FR 7378, Feb. 12, 1999, as amended at 64 FR 62568, Nov. 17, 1999; 65 

FR 14433, Mar. 17, 2000]