Under the appraisal regulations, the following transaction types do not require an appraisal, but do require an evaluation:
· Transactions where the “transaction value” (generally the loan amount) is $250,000 or less; · Certain renewals, refinances, or other transactions involving existing extensions of credit; and · Real estate-secured business loans with a transaction value of $1,000,000 or less and when the sale of, or rental income derived from, real estate is not the primary source of repayment for the loan. |
o There has been no obvious and material change in market conditions or physical aspects of the property that threaten the adequacy of the institution’s real estate collateral protection after the transaction, even with the advancement of new monies;
o There is no advancement of new monies other than funds necessary to cover reasonable closing costs. |
To satisfy the condition for no obvious and material change in market conditions or the physical aspects of the property, the current or planned future use of the property should be consistent with the use identified in the existing appraisal or evaluation. For example, if a property has reportedly increased in value because of a planned change in use of the property resulting from rezoning, an appraisal should be performed unless another exemption applies.
If an evaluation is permitted under this exemption, an institution may use an existing appraisal or evaluation as long as the institution verifies and documents that the appraisal or evaluation continues to be valid. (See the discussion in the Validity of Appraisals and Evaluations section of these Guidelines.) Even if a subsequent transaction qualifies for this exemption, an institution should consider the risk posed by the transaction and may wish to consider obtaining a new appraisal. |
Reserve the right to require an appraisal under this subpart whenever the agency believes it is necessary to address safety and soundness concerns.
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912-601-1149
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