OK, I am trying to prove that either I am right or wrong, don't care which just done arguing with commercial lenders. He is using an appraisal that he has a copy of from another bank...loan is 2 million, not assigned to us. I quoted from FDIC the following Q&A section. Is it OK for us to use it? If not, please give me a way to explain, he is going to pull in our chairman of the board because he agrees with the lender. THANKS!!

10. Can an appraisal be transferred from one lender to another and, if so, under what circumstances?

Answer: A regulated institution may accept an appraisal transferred from another regulated institution or from a financial services institution (that is, a non-regulated institution), provided 1) the appraiser is engaged directly by the institution transferring the appraisal, 2) the appraiser has no direct or indirect interest in the property or transaction, 3) the existing appraisal or evaluation remains valid, and 4) the regulated institution determines that the appraisal conforms to the agencies' appraisal requirements and interagency guidelines and is otherwise appropriate. (A financial services institution describes entities that provide services in connection with real estate lending transactions on an ongoing basis.)
Regulated institutions are expected to perform a more thorough review when accepting an appraisal from another financial services institution to confirm that the appraisal complies with the regulation and has sufficient information to support the lending decision. Moreover, the regulated institution accepting the appraisal should determine whether appropriate documentation is available to confirm that the financial services institution (not the borrower) ordered the appraisal.

Truthfully, in order to get certification that the other lending institution ordered the appraisal directly, etc...you need a transfer letter with the appropriate wording included.

He has a copy of the engagement letter...and feels that is acceptable.?

That should prove the bank initiated the request. You should be okay, IMHO.

So just so I am clear, it doesn't have to be assigned? Our name is nowhere on there, just the other bank's name. I appreciate your help!

right...it can be in the other FI's name...so long as they intiated the request and not the borrower.