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Agencies raise residential appraisal threshold
The Federal Reserve Board, FDIC, and OCC issued a joint press release on Friday, announcing the adoption of a final rule that increases the threshold for residential real estate transactions requiring an appraisal from $250,000 to $400,000. For transactions exempted from the appraisal requirement, the final rule requires institutions to obtain an evaluation to provide an estimate of the market value of real estate collateral. Evaluations are generally less burdensome than appraisals and have been required since the 1990s. The rule will be effective the day following publication in the Federal Register.
The final rule incorporates the appraisal exemption for rural residential properties provided by the Economic Growth, Regulatory Relief, and Consumer Protection Act and similarly requires evaluations for these transactions. It also includes a requirement that institutions to review appraisals for compliance with the Uniform Standards of Professional Appraisal Practice. These two provisions of the final rule will be effective January 1, 2020.