Categories: FDIC

New Appraisal Threshold for Residential Real Estate Loans

FIL-53-2019
September 27, 2019

New Appraisal Threshold for Residential Real Estate Loans

Printable Format:

FIL-53-2019 – PDF (PDF Help)

Summary:

The FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency (the Agencies) have jointly issued an amended rule (the Appraisal Rule) that increases the threshold for residential real estate transactions requiring an appraisal from $250,000 to $400,000. For transactions exempted by the $400,000 threshold, the Appraisal Rule requires an evaluation. The Appraisal Rule also incorporates the appraisal exemption for rural residential properties provided by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRCCPA) and requires evaluations for these exempt transactions. In addition, the Appraisal Rule requires appraisals for federally related transactions to be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised institutions.

Highlights:

  • Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI) requires the Agencies to adopt regulations prescribing standards for appraisals used in connection with federally related transactions within the jurisdiction of each agency, and that they be performed by certified or licensed appraisers. Title XI authorizes the Agencies to establish a threshold level below which an appraisal is not required.
  • The Appraisal Rule creates a new definition of, and a separate category for, residential real estate transactions and raises the threshold for requiring an appraisal for such transactions from $250,000 to $400,000.
  • For transactions exempt under the applicable thresholds, the Appraisal Rule requires an appropriate evaluation of the real property collateral that is consistent with safe and sound banking practices but does not need to be performed by a licensed or certified appraiser or meet the other Title XI appraisal standards.
  • The Appraisal Rule also incorporates the appraisal exemption for rural residential properties added to Title XI by Section 103 of EGRCCPA and requires evaluations for these transactions.
  • Finally, the Appraisal Rule requires appraisals for federally related transactions to be subject to appropriate review for compliance with the USPAP, pursuant to Title XI, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • The final rule becomes effective the first day after publication in the Federal Register, except for provisions related to appraisal review and the evaluation requirement related to the rural residential exemption, which become effective January 1, 2020.
IR Press

Share
Published by
IR Press

Recent Posts

Treasury Issues Final Rule Expanding CFIUS Coverage of Real Estate Transactions Around More Than 60 Military Installations

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury), as Chair of the Committee…

3 days ago

U.S. Department of the Treasury’s CDFI Fund and Federal Housing Finance Agency Collaborate to Bolster CDFI Access to Capital

WASHINGTON—Today, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) and…

3 days ago

Report on U.S. Portfolio Holdings of Foreign Securities at Year-End 2023

Washington – The findings from the annual survey of U.S. portfolio holdings of foreign securities…

4 days ago

READOUT: U.S. Department of the Treasury Hosts Roundtable Discussion on the Financial Sector’s Response to Recent Hurricanes

WASHINGTON – The U.S. Department of the Treasury hosted a roundtable on October 30 with…

4 days ago

READOUT: Sixth Meeting of the Financial Working Group Between the United States and the People’s Republic of China

WASHINGTON – The United States and the People’s Republic of China held the sixth meeting…

4 days ago

Treasury Sanctions Key Members of La Linea, a Group Involved in Trafficking Fentanyl into the United States

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned…

4 days ago