Certified Appraisal Changes
By: Stephen Rountree
During April 2018, banking federal banking Regulators issued changes for appraisal, FIRREA, requirements. The change became effective on April 10, 2018 (the day after it was published in the Federal Register).
The change has, over simplified, established three thresholds for real estate related loans are which certified real estate appraisals will be required. For simple residential real estate loans, the requirements are unchanged – if the loan exceeds $250,000 a certified appraisal will be required. For CRE transactions, a certified appraisal will not be required for transactions of $500,000 (note the increase from the previous $250,000 limit) and those that exceed $1 million.
The joint pronouncement can be accessed at https://www.federalregister.gov/documents/2018/04/09/2018-06960/real-estate-appraisals
Excerpts from the Rule include:
The change has, over simplified, established three thresholds for real estate related loans are which certified real estate appraisals will be required. For simple residential real estate loans, the requirements are unchanged – if the loan exceeds $250,000 a certified appraisal will be required. For CRE transactions, a certified appraisal will not be required for transactions of $500,000 (note the increase from the previous $250,000 limit) and those that exceed $1 million.
The joint pronouncement can be accessed at https://www.federalregister.gov/documents/2018/04/09/2018-06960/real-estate-appraisals
Excerpts from the Rule include:
- The final rule increases the threshold level at or below which appraisals are not required for commercial real estate transactions from $250,000 to $500,000
- It excludes all transactions secured by a single 1-to-4 family residential property; not proposing any threshold increases for transactions secured by a single 1-to-4 family residential property
- Require that regulated institutions entering into commercial real estate transactions at or below the proposed commercial real estate appraisal threshold obtain evaluations that are consistent with safe and sound banking practices unless the institution chooses to obtain an appraisal for such transactions