The Federal Reserve Board, the Office of the Comptroller of the Currency, and the FDIC adopted a final rule that will exempt residential real estate transactions of $400,000 or less from appraisal requirements.
In addition to raising the appraisal threshold from $250,000 to $400,000, the final rule will:
- require institutions whose transactions are exempted from the appraisal requirement to get an evaluation of the real property collateral that contains "sufficient information and analysis to support the decision to engage in the transaction";
- define a "residential real estate transaction" as one secured by a single 1-to-4 family residential property;
- implement changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act by (i) adding certain transactions secured by residential property in rural areas to the list of exempt transactions, and (ii) requiring institutions to obtain evaluations on the exempt transactions; and
- require regulated institutions to submit appraisals for federally related transactions for appropriate review to ensure compliance with the Uniform Standards of Professional Appraisal Practice ("USPAP").
The evaluation required for the rural residential appraisal exemption and the USPAP review requirement will be effective on January 1, 2020. The remaining requirements will become effective the day after the final rule is published in the Federal Register.
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