If market conditions are changing rapidly, “current information” may need to be more up-to-date than is usually the case. Examiners generally are not expected to challenge the underlying valuation assumptions, including discount rates and capitalization rates, used in appraisals or evaluations when these assumptions differ only in a limited way from norms that would generally be associated with the collateral under review.
Loans will be classified and valued on the basis of cash flow first, and collateral value second. Assessments of cash flow and valuation will be much more reliable if based on solid documentation. In the absence of documentation, examiners will have to make assumptions.