NCUA Quadruples the Appraisal Threshold
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Appraisers, especially Commercial appraisers,
I picked this info up from a message sent out by the Appraisal Institute on July 18, 2019:
“The NCUA Board of Directors today quadrupled – from $250,000 to $1 million – the appraisal threshold for nonresidential real estate loans. NCUA is the National Credit Union Administration.
The appraisal threshold is the loan amount below which appraisals are not required.
Increasing the threshold would drastically increase the number of nonresidential real estate loans that would not require an appraisal.”
That last sentence is somewhat convoluted. (I didn’t write it!)
More simply stated: The decision will REDUCE the number of appraisals needed for Commercial property loans, which originate with Credit Unions.
Secondarily, the other major loan guarantee agencies threshold is half as much, $500,000. So the NCUA Board decision has the potential of significantly impacting all aspects of Commercial appraisals. It presents a possible upheaval in the industry/profession.
This decision also means that any person a CU designates can do a commercial property EVALUATION when the loan amount will be below $1 million. It begs the question: who will value the actual property which will be the collateral for the loan?
Since most loans are written for a percentage of the collateral value, it means.
Like so many things in life, the NCUA Board decision was predicated primarily on greed. They hope to generate more business for Credit Unions whereby those local organizations can say to community business people… “We’ll give you a boatload of money and you won’t have to pay for a proper appraisal which will be the evidence basis for the pile of moolah.”
This is a lot like the liar loans that infiltrated residential lending not that long ago.
It’s also akin to the ‘savings and loan crisis’ many of us went through in the late 1970’s – early 80’s.
It’s too bad people cannot learn from past history. “Oh, but it’s different now!” Yah, right… same pile of barnyard stuff, but just wearing a different pair of boots.