A regulatory threshold that’s been in place for nearly a quarter of a century could be shifting soon. The FDIC, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency are jointly issuing a notice of proposed rulemaking (NPR) and inviting public comment during a 60-day window after the notice is published in the Federal Register.
The notice, entitled Real Estate Appraisals, proposes increasing the threshold for residential real estate transactions that require an appraisal from $250,000 to $400,000. This would be the first such alteration to that threshold since 1994. According to the joint joint statement released by the agencies, “Consistent with the requirement in the appraisal regulations for other transactions below their threshold exemptions, regulated institutions would be required to obtain an appropriate evaluation of the real property collateral that is consistent with safe and sound banking practices for transactions exempted as a result of the proposed threshold.”
The NPR would also “add certain transactions secured by residential property in rural areas that have been exempted from the appraisal requirements pursuant to section 103 of the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions in the appraisal regulations.” The proposed rule would require evaluations for this type of transaction.
The proposed rule would also require regulated institutions to “subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice,” in keeping with changes instituted by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
You can read the full NPR by clicking here.
Jeff Dickstein, Chief Compliance Officer for Pro Teck Valuation Services, explored some of the ways the Dodd-Frank Act has impacted the appraisal industry in his October DS News feature entitled “The Unforeseen Consequences of Dodd-Frank.”
“While Dodd-Frank was passed in 2010, the collection of fees and the creation of the National AMC Registry didn’t go into effect until August 10, 2018. In those eight years, lawmakers at the state and federal levels haven’t been able to amend state laws to collect the fees, and the federal government hasn’t revisited what to do with the surplus,” Dickstein wrote. “As a result, 26 states have applied for and been granted a one-year extension to comply with the program.”