A final rule to increase the threshold level at or below which appraisals are not required for commercial real estate transactions from $250,000 to $500,000 was approved by the board of the federal deposit insurance agency at its meeting Tuesday, part of a three-agency effort to adopt conforming regulations.
According to the memo distributed to the Federal Deposit Insurance Corp. (FDIC) Board, the final rule defines commercial real estate transaction as a real estate-related financial transaction that is not secured by a single 1-to-4 family residential property. It excludes all transactions secured by a single 1-to-4 family residential property, so construction loans secured by a single 1-to-4 family residential property are excluded.
For commercial real estate transactions exempted from the appraisal requirement as a result of the revised threshold, banks and other regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices.
The rule was adopted in conjunction with similar regulations agreed to by the Office of the Comptroller of the Currency, Treasury (OCC) and the Federal Reserve.
The FDIC Board adopted the regulation as part of its “summary agenda”; no vote was taken at its March 20 quarterly meeting.