Regulators propose to raise residential RE appraisal threshold

The OCC, Fed and FDIC have issued a notice of proposed rulemaking that would raise the threshold for residential real estate transactions requiring an appraisal to $400,000. The jointly prepared proposal would require that residential real estate transactions exempted by the $400,000 threshold obtain an evaluation consistent with safe and sound banking practices. Evaluations provide an estimate of the market value of real estate but could be less burdensome than appraisals because the agencies’ appraisal regulations do not require evaluations to be prepared by state licensed or certified appraisers.

The proposal also would incorporate the rural residential appraisal exemption in the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions and require evaluations for these exempt transactions. In addition, the proposal would require institutions to appropriately review appraisals for compliance with the Uniform Standards of Professional Appraisal Practice, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

• Federal Register Notice
• OCC press release
• FDIC press release

UPDATE:Published 12/7/18 at 83 FR 63110, with comment period ending 2/5/19.