De Minimus Impact on the Appraisal Industry
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Folks, anytime there is a major change proposed or activated within the appraisal profession, many appraisers go into hyperventilation mode.
The action taken on August 20, 2019, by the FDIC to raise the de minimus LOAN VALUE from $250,000 to $400,000 has had such an effect among many, but it may not be as dire as anticipated.
An appraiser sent this 2018 HousingWire article to me earlier today:
Within the body of the article, this is stated, which is taken from the original proposal as published in the Federal Register:
It’s important to note that this rule would not apply to loans wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government-sponsored agency.
That means that the appraisal exemption would not apply to loans sold to or guaranteed by the Federal Housing Administration, Department of Housing and Urban Development, Department of Veterans Affairs, Fannie Mae, or Freddie Mac.”
I am presuming the action taken on August 20, 2019, by the FDIC contains such provisions, although I have not read the actual order.
Another appraiser chatted with me today. This person has been around appraising since dirt was invented, and said that THREE changes to the de minimus have been experienced, with very little negative impact to appraising as a whole. The appraiser said that appraisers actually were busier after the changes were implemented! So, if history repeats, that could be a positive sign.
Another person more familiar with the Wash DC processes said the Effective Date of the new de minimus will be the DAY AFTER it is published in the Federal Register, which is required before any law or regulation goes into effect. So it will be a week or so before that happens.
All in all, maybe our feathers are fluffed too much, and we need to assume the lotus position and breathe deeply. Panic and hyperventilation may not suit us well.
On the other hand, I’m going to suggest, as others have done, that appraisers take steps to broaden their businesses into other types of property appraisal assignments not directly related to mortgage lending.
Real property appraising probably always will be a needed occupation. But the details of that occupation are changing. Don’t be afraid of having the cheese moved. Instead, find a way to capture it!