Recently, narrow exceptions have been carved out of the rule that CMAs and Letters of Opinion can only be done for the purpose of pursuing a listing or to aid a buyer. The exceptions, found in subsection (4) of OAR 863-015-0190, deal with what are called “lending collateral analysis;” or “default collateral analysis.” “Lending collateral analysis” means a real property market analysis where the purpose of the analysis is for use by a lending institution in support of a loan application. “Default collateral analysis” means a real property market analysis where the purpose of the analysis is for use by a lending institution in considering its actions with respect to a loan in default.
Lending collateral analysis and default collateral analysis are creatures of Federal law. They were originally exceptions to the appraisal requirements for Federally-backed real estate mortgages. Such analyses are not appraisals and under state or Federal law can be used only for the internal purposes of a financial institution when the loan is less than $250,000. OAR 863-015-0190(4) allows Oregon real estate licensees to do a lending collateral analysis or a default collateral analysis provided the analysis is for the internal purposes of a financial institution when the loan is less than $250,000.
Lending collateral analysis and default collateral analysis are often confused with CMAs and BPOs. They are, however, not the same thing at all. Basically, the Real Estate Agency has simply incorporated state and Federal appraisal law exceptions into real estate license law and grafted them onto the existing CMA/BPO rules. The appraisal exceptions, however, apply to anyone employed by a financial instruction to do such analysis for internal use.
Having a real estate license is irrelevant to the appraisal exceptions that allow financial institutions to use lending collateral analysis and default collateral analysis instead of appraisals. This explains why, unlike CMAs and BPOs, there are no real estate license law provisions that dictate the contents of such analysis when done by a real estate licensee. The administrative rule simply allows licensees to do what anyone employed by a financial institution can do. It is for that reason that banks often deal individually with agents and do not involve the agent’s broker or company. Agents involved in providing such analysis should be aware, however, that they must disclose their involvement if they later list or represent a buyer in the purchase of the property.