The Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve have issued a final rule to raise the threshold from $250,000 to $400,000 for residential real estate transactions that would require an appraisal.
In a recent press release
, the regulators stated that given price appreciation in residential real estate transactions since 1994 (when the appraisal threshold was last increased to $250,000), “the change will provide burden relief without posing a threat to the safety and soundness of financial institutions.”
Last year, federal regulators increased the appraisal threshold for commercial real estate loans. NAHB sent a letter of support for this action and also asked the regulators to consider doing the same for residential transactions.
Residential real estate transactions exempted by the threshold will still require an evaluation consistent with safe and sound banking practices.
The rule generally applies to loans held in a bank’s portfolio, and does not apply to loans insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, the U.S. Department of Agriculture or loans purchased by Fannie Mae and Freddie Mac.
For more information, contact Curtis Milton
at 800-368-5242 x8597.