Valuations

(a) General. This section describes Agency requirements for:

(1) Real estate and personal property appraisals made in connection with the making and servicing of direct FLP and Non-program loans;

(2) Appraisal reviews conducted on appraisals made in connection with the making and servicing of direct and guaranteed FLP and Non-program loans;

(3) Real estate evaluations made in connection with the making and servicing of direct FLP loans and Non-program loans; and

(4) Reviews of real estate evaluations made in connection with the making and servicing of direct and guaranteed FLP and Non-program loans.

(b) Valuation standards. (1) Real estate appraisals, technical appraisal reviews and their respective forms must comply with the standards contained in USPAP, as well as applicable Agency regulations and procedures for the specific FLP activity involved. Applicable appraisal procedures and regulations are available for review in each Agency State Office.

(2) When a personal property appraisal or real estate evaluation is required, it must be completed on an applicable Agency form (available in each Agency State Office) or other format containing the same information.

(c) Use of an existing real estate appraisal. Except as otherwise provided in 7 CFR part 766, when a real estate appraisal is required, the Agency will use the existing real estate appraisal to conduct the loan transaction under either of the following conditions:

(1) The appraisal was completed within the previous 18 months and the Agency determines that:

(i) The appraisal meets the provisions of this section and the applicable Agency loan making or servicing requirements; and

(ii) Market values have remained stable since the appraisal was completed; or

(2) The appraisal was not completed in the previous 18 months, but the Agency determines that the appraisal meets the requirements of this section, and:

(i) The appraisal has been updated by the appraiser or appraisal firm that completed the appraisal and both the update and the original appraisal were completed in accordance with USPAP; or

(ii) The appraisal was completed in the previous 36 months and the Agency has documentation reflecting that:

(A) Market conditions have remained stable or improved based on sales of similar properties;

(B) The property in question remains in the same or better condition; and

(C) The value of the property has remained the same or increased.

(d) Valuation reviews. (1) With respect to a real estate appraisal, the Agency may conduct a technical appraisal review or an administrative appraisal review, or both.

(2) With respect to a personal property appraisal or real estate evaluation, the Agency may conduct an administrative review.

(e) Valuation appeals. Challenges to a valuation used by the Agency are limited as follows:

(1) When an applicant or borrower challenges a real estate appraisal used by the Agency for any loan making or loan servicing decision, except primary loan servicing decisions as specified in § 766.115 of this chapter, the issue for review is limited to whether the appraisal used by the Agency complies with USPAP. The applicant or borrower must submit a technical appraisal review prepared by a State Certified General Appraiser that will be used to determine whether the Agency's appraisal complies with USPAP. The applicant or borrower is responsible for obtaining and paying for the technical appraisal review.

(2) When an applicant or borrower challenges a personal property appraisal used by the Agency for any loan making or loan servicing decision, except for primary loan servicing decisions as specified in § 766.115 of this chapter, the issue for review is limited to whether the appraisal used by the Agency is consistent with present market values of similar items in the area. The applicant or borrower must submit an independent appraisal review that will be used to determine whether the appraisal is consistent with present market values of similar items in the area. The applicant or borrower is responsible for obtaining and paying for the independent appraisal review.

(3) When an applicant or borrower challenges a real estate evaluation used by the Agency for any loan making or loan servicing decision, except for primary loan servicing decisions as specified in § 766.115 of this chapter, the issue for review is limited to whether the real estate evaluation used by the Agency is consistent with present market values of similar properties in the area. The applicant or borrower must submit an independent review of the real estate evaluation that will be used to determine whether the evaluation is consistent with present market values of similar properties in the area. The applicant or borrower is responsible for obtaining and paying for the independent real estate evaluation review.

(f) Real estate evaluations. (1) Real estate related financial transactions that do not exceed the higher of the current OMB appraisal threshold or the following limits do not require a real estate appraisal:

(i) $500,000 for commercial real estate transactions; or

(ii) $250,000 for business loan transactions.

(2) A real estate evaluation may be completed when a real estate appraisal is not required to determine the security value under this subpart.

(3) The determination to not obtain a real estate appraisal is subject to applicable Agency guidance.

(4) Notwithstanding the provisions of this subpart, the Agency retains the discretion to obtain a real estate appraisal in lieu of completing a real estate evaluation on a case-by-case basis.

[91 FR 56751, Sept. 4, 2026]