The Federal Reserve Board has joined with the other two federal banking regulators in inviting public comment on a proposal to exempt real estate transactions below $400,000 from federal real estate appraisal requirements, the agency said in a release Tuesday. The proposal is out for comment until Feb. 5.
The Fed approved issuance of the proposed rule in a unanimous vote Nov. 30, according to published information. The proposal is being issued jointly by the Fed as well as the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC); the latter two agencies announced their actions Nov. 20.
The Fed notes that the proposed rule addresses issues on which regulators have already received comment as well as a provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). EGRRCPA exempts from appraisal requirements certain federally related, rural real-estate transactions valued below $400,000 if no state-certified or state-licensed appraiser is available.
The banking regulators’ proposal raises the threshold for residential real estate transactions in rural areas requiring an appraisal from $250,000 to $400,000, according to the Fed’s release Tuesday. As is required for other transactions that fall below applicable thresholds, it says regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices.
The Fed adds that the proposal would require institutions to appropriately review all appraisals required by the agencies’ appraisal rules to ensure their compliance with appraisal industry standards.[The EGRRCPA-created exemption also affects credit unions; the National Credit Union Administration Board included the exemption in a proposal issued in October.]
Comments will be due 60 days after the proposal is published in the Federal Register.