Federal regulators issued guidelines Thursday clarifying accepted procedures for real estate appraisals and evaluations.

The guidance discourages institutions from using automated valuation models in transactions requiring an appraisal. Regulators called on banks to use only appraisals that sufficiently support credit decisions, use appraisal criteria that are consistent with safe and sound banking practices and implement internal controls to ensure compliance with an institution's appraisal program.

The guidelines also reaffirmed the need to maintain a standard of independence when it comes to appraising collateral values.

"Appraisers must be independent of the loan production and collection processes and have no direct, indirect or prospective interest, financial or otherwise, in the property or transaction," the guidelines stated. "These standards should also apply to persons who perform evaluations."

Regulators said an institution's appraisers should be subject to periodic review of their work, be able to provide unbiased opinions and have obtained appropriate state certification.

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