Regulators Propose Expanding Appraisal Exemption on Home Sales
The Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve have issued a proposed rule to raise the threshold from $250,000 to $400,000 on required appraisals for residential real estate transactions.
In a press release, the regulators stated that the proposal is “in response to concerns raised about the time and cost associated with completing residential real estate transactions.”
The appraisal threshold was last increased to $250,000 in 1994.
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.
Regulators acknowledge that the proposal to raise the appraisal threshold was due in part to comments they have received which state that the current $250,000 exemption level for home purchases have not kept pace with price appreciation in the residential real estate market. Residential real estate transactions exempted by the threshold would 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 or U.S. Department of Agriculture or purchased by Fannie Mae and Freddie Mac.
Comments will be accepted for 60 days from publication in the Federal Register.
NAHB will review the proposed rule to determine the potential impact on members.
For more information, contact Curtis Milton at 800-368-5242 x8597.