The appraisal threshold for real estate transactions secured by a 1-to-4 family residential property will rise from $250,000 to $400,000 under a final rule issued Friday by federal banking agencies, but banks will still be required to obtain evaluations of the transactions “consistent with safe and sound banking practices,” the agencies said.
“The agencies have consulted with the Consumer Financial Protection Bureau (CFPB), and, as required by statute, have received its concurrence on the increased threshold,” according to a release issued jointly by the Federal Reserve Board, the Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC). “The CFPB released its letter concurring that the increased threshold provides reasonable protection for consumers who purchase 1-4 unit single-family residences.”
More than 560 comments were received on the proposed rule, the agencies said.
Additional provisions in Friday’s rule make a conforming amendment reflecting an exemption provided by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) for transactions secured by residential property in rural areas (evaluations will be required, however). They also include a provision that requires regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).
The new, $400,000 appraisal threshold is set to take effect one day after the rule’s publication in the Federal Register. The evaluation requirement for transactions exempted by the rural residential appraisal exemption and the requirement to review appraisals for compliance with the USPAP take effect Jan. 1, 2020.
The FDIC issued a Financial Institution Letter on the final rule Friday.
FDIC Financial Institution Letter (FIL-53-2019)