Regulators propose appraisal change to commercial real estate loans
by July 19, 2017 10:24 am 266 views
Federal banking agencies on Tuesday (July 18) issued a notice of a proposed rule to raise the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $400,000.
The Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency say they responding to concerns about the time and cost associated with completing real estate transactions. There are also concerns that the current exemption level had not kept pace with price appreciation in the commercial real estate market.
The agencies believe raising the threshold will significantly reduce the number of transactions that require an appraisal and will not pose a threat to the safety and soundness of financial institutions.
The current commercial real estate appraisal thresholds have been in place for about 23 years, according to the FDIC.
FDIC Chairman Martin J. Gruenberg said raising the threshold will be a “meaningful reduction” in regulatory burden, particularly for rural banks.
“Bankers in rural parts of the country at outreach sessions expressed significant concerns with delays in completing real estate transactions due to a scarcity of appraisers in those areas,” Gruenberg said in a statement “I think it is fair to say that this proposal will be responsive to some of those concerns.”
Comments on the proposed rule will be accepted for 60 days from publication in the Federal Register.