WASHINGTON — The financial services industry is pushing regulators to clarify appraisal requirements for loan modifications in response to the Obama administration's new plan to prevent foreclosures.

Some lenders are concerned that current regulations mandate that they get new appraisals for all real estate-related transactions, including refinancings and loan modifications. Banking industry representatives argue that doing so is increasingly difficult in hard-hit markets, and that the Obama plan, which is designed to encourage modifications, does not tackle the issue.

"One of the issues that needs to be addressed is the role of appraisers and appraisals in the process," said Diane Casey-Landry, the chief operating officer of the American Bankers Association. "In a market that's not functioning, it's difficult to get an accurate valuation."

Under the Obama plan, lenders are encouraged to work with the Treasury Department to reduce monthly payments to no more than 31% of the borrower's income under a modification set to last for five years. Though the plan includes significant incentives for modifications, observers said the appraisal issue has emerged as a primary stumbling block.

"The question that comes up in the program is what is the current value," said Lawrence Kaplan, a partner at Paul, Hastings, Janofsky & Walker LLP. "You have to have someone say what the value of the house is in order to make the modification."

The appraisal requirement leaves lenders in a sticky situation, Mr. Kaplan said. "You start to get into loan-to-value issues. It's the issue as with toxic assets — is it going to cause everyone to have to write down things?"

The ABA is planning to ask the Federal Deposit Insurance Corp., which developed the modification program on which the Obama plan is based, for clarification on the appraisal issue.

Neither the FDIC nor the Office of the Comptroller of the Currency would discuss the issue.

But not everyone thinks that appraisals are necessary.

A spokesman for the Office of Thrift Supervision said regulators do not require an appraisal on real estate transactions in which no new funds were supplied to a borrower.

John Courson, president of the Mortgage Bankers Association, agreed. "Under the current regulation, you do not need an appraisal if you do not need any new money," he said.

But bankers are still cautious. One reason for their reticence may be a concern that vigilant examiners could still criticize them for not keeping their appraisal up-to-date. "The question becomes will the banking agencies, will the examiners, when they come in and see that you're not going through the expense of getting new appraisals, will they criticize you for not doing that?" said Gil Schwartz, a partner at Schwartz & Ballen LLP.

Ms. Casey-Landry said regulators should clarify exactly when a fresh appraisal is needed on a property and when the requirement can be waived. She said she has already talked about the issue with the White House. "Administration officials expressed an openness to work with us on this issue."

L. William Seidman, a former chairman of the FDIC, said the issue is just one of many that have to be addressed before the new modification plan can really work.

"If you have to get appraisals on every loan you modify, you're going to be short on appraisers, and it's going to take longer and so forth," he said. "A lot of the program requires an evaluation."

Mr. Schwartz said the answer could be part of a broader package of clarifications that regulators must issue in the coming weeks regarding the new plan.

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