FDIC Proposal Loosens Residential Appraisal Requirements
In April 2018, the FDIC amended the appraisal guidelines that required appraisals for commercial real estate transactions over $250,000. The proposal was presented in July 2017 and was finally approved in 2018. The new guidelines raise the threshold from $250,000 to $500,000. Therefore, for any commercial real estate transactions below the new threshold, the guidelines require financial institutions to obtain a property evaluation that is consistent with safe and sound banking practices.
In December 2018, the FDIC issued a proposal to increase the threshold level for appraisal requirements from $250,000 to $400,000 for residential real estate transactions. The rationale behind the proposal is that it would alleviate the burden from appraisal requirements without jeopardizing the safety and soundness of financial institutions. The proposed increase in the threshold is in part due to the continued appreciation in the residential real estate market. Furthermore, the threshold has not changed since the 1990s.
The appraisal guidelines as they stand today require appraisals for transactions over $250,000. Any transaction under the threshold would require a property evaluation. Property evaluations do not have to be prepared by a licensed or certified appraiser and are less expensive than appraisals.
Comments regarding the proposal were accepted until February 5, 2019.
Click here to access the complete proposal.