U.S. regulators propose new appraisal standards

WASHINGTON Nov 13 (Reuters) - U.S. financial regulators on Thursday proposed new guidelines for lenders' real estate appraisal and evaluation activities in an effort to deal with one of the root causes of the financial crisis -- poorly underwritten mortgages that are now failing.

The five federal regulators said in a joint statement that the guidelines spell out minimum appraisal standards, including requiring appraisers to discount the value of proposed residential developments with unsold homes.

The guidance also requires lenders to use independent appraisers and set up independent evaluation procedures.

During the final years of the real estate boom, fraudulent and poorly conducted appraisals were blamed for overinflating the market value of properties,

"The initiative is intended to respond to heightened concerns over appraisals and credit quality," said the regulators, comprising the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp, the Office of Thrift Supervision and the National Credit Union Administration.

The regulators are seeking comments from interested parties for a 60 day-period. (Reporting by David Lawder; Editing by Andrea Ricci)