Recent changes in credit unions’ federal appraisal requirements and changes specifically affecting federally backed mortgage loans – most of them responding to disruptions brought by the coronavirus pandemic – are detailed in a new letter to credit unions issued Wednesday by the cooperatives’ federal regulator.
The letter, No. 20-CU-10, summarizes the National Credit Union Administration (NCUA) Board’s action April 16 to raise the threshold for credit unions’ real estate appraisal requirements; a recent interim rule temporarily allowing deferrals of appraisals; and appraisal flexibilities also allowed by the housing-related government-sponsored enterprises and other agencies.
Threshold for residental real estate appraisals: The NCUA Board on April 16 raised the threshold amount triggering a required residential real estate appraisal from $250,000 to $400,000. Effective upon its publication in the Federal Register, the final rule permits a credit union to obtain either an appraisal or a written estimate of market value for residential transactions involving less than $400,000.
Appraisal deferrals: The NCUA Board on April 16 approved an interim final rule to allow credit unions to defer appraisals and written estimates of market value for transactions requiring such valuations for up to 120 days after the closing of a real estate loan. This interim final rule is similar to one approved by banking regulators earlier in the month. This deferral authority expires Dec. 31, 2020; if a transaction closes on that date, the credit union would have until April 30, 2021, to obtain the required appraisal or written estimate of market value. The interim final rule, qhich sets no transaction amount limit, covers all residential real estate loans and all commercial real estate loans except acquisition, development, construction loans, the letter states.
Other appraisal and evaluation flexibilities: The letter summarizes measures highlighted in an April 14 interagency statement regarding flexibilities, existing and new to address pandemic, allowed under the Uniform Standards of Professional Appraisal Practice (USPAP), Fannie Mae, and Freddie Mac on property valuation methods; and existing exemptions under financial institution regulatory agency rules.
The letter notes that the Housing and Urban Development, Veterans Affairs, and Agriculture Departments have also updated appraisal flexibilities for residential mortgages that they insure or guarantee. “These new measures closely align with the appraisal flexibilities offered by Fannie Mae and Freddie Mac, including desktop appraisals and exterior-only inspections for certain real estate transactions,” it states.