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Judgment & ambiguity · Decisions under uncertainty

A borrower requests a renewal on a secured line, but the last appraisal on the collateral is three years old and the local market for that property type has clearly moved since. Approve on the stale value, order a new appraisal, or something else — and how do you decide?

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A three-year-old value in a market that's visibly moved isn't a value I'll lend against as if it were current — but whether I order a full appraisal depends on which way the risk cuts and how much cushion I have.

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