Comments Needed on Appraisal Requirement
93 25 20
The OCC, Board, and FDIC (collectively, the agencies) are inviting comment on a proposed rule to amend the agencies’ regulations requiring appraisals for certain real estate-related transactions. The proposed rule would increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable thresholds, regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The proposed rule would make conforming changes to add transactions secured by residential property in rural areas that have been exempted from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions. The proposed rule would require evaluations for these exempt transactions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rule would amend the agencies’ appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.
Read the entire proposal and comment here.
Cost and Time Savings. Commenters to the EGRPRA process and in response to the CRE NPR that supported a residential threshold increase noted that obtaining an appraisal for a residential real estate transaction adds to the cost of the transaction, which is often passed on to the consumer, and can delay the closing of a transaction when an appraiser cannot complete the appraisal on the preferred schedule and increase the consumer’s costs. Thus, reducing regulatory burden by increasing the appraisal threshold for residential real estate transactions may provide both transaction cost and time savings for both regulated institutions and consumers…
The United States Department of Veterans Affairs’ appraisal fee schedule? (46) for a single-family residence reflects that the typical cost of an appraisal generally ranges from $375 to $900, depending on the location of the property. The limited information available on the cost of evaluations and appraisals suggests that there could be material cost savings in connection with the valuation of the property for regulated institutions and consumers where an evaluation, as opposed to an appraisal, is obtained.
Question 1. The agencies invite comment on the cost data for evaluations and appraisals detailed above. Should the agencies consider other data and data sources in assessing the costs of appraisals and evaluations to regulated institutions and consumers?..