The Federal Deposit Insurance Corporation (FDIC) has issued a proposed residential real estate guideline raising the threshold for transactions requiring an appraisal to $400,000.
Officials said the proposal stems from concerns raised about the time and cost associated with completing residential real estate transactions. The FDIC believes raising the threshold from the current level of $250,000 could provide burden from the appraisal requirements, without posing a threat to the safety and soundness of financial institutions.
The proposal would require residential real estate transactions exempted by the threshold to obtain an evaluation consistent with safe and sound banking practices. Assessments provide an estimate of the market value of real estate but could be less burdensome than appraisals because the FDIC’s appraisal regulations do not require evaluations to be prepared by state licensed or certified appraisers.
Comments will be accepted for 60 days from publication in the Federal Register, per officials, who also said the proposed guideline would incorporate the rural residential appraisal exemption in the Economic Growth, Regulatory Relief and Consumer Protection Act into the list of exempt transactions and require evaluations for these exempt transactions.
Institutions would also be required to appropriately review appraisals for compliance with the Uniform Standards of Professional Appraisal Practice, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.