The Appraisal Institute on Feb. 4 was one of six organizations signing a comment letter that “strongly opposed” a proposal from the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency to raise the residential appraisal threshold from $250,000 to $400,000.
If the proposal is approved, nearly three quarters of residential real estate loans held in portfolio by depository institutions would be exempt from appraisal requirements. A high percentage of those loans are from rural areas.
The same proposal was evaluated and answered in 2017 as part of the process of the federally mandated Economic Growth and Regulatory Paperwork Reduction Act — a regulatory relief effort that encompassed four different notice and comment periods and six public hearings. At that time, the same agencies that are now proposing the increase said it “would not be appropriate” to increase the residential threshold considering safety and soundness and consumer protection concerns.
The “about face” is an apparent attempt by the agencies to pacify rural community banks that received discrete relief from Congress through EGRPRA. The valuation organizations that signed the comment letter have also requested a hearing on the proposal, but the agencies continue to deliberate on the issue.
In addition to the Appraisal Institute, the comment letter was signed by:
- American Guild of Appraisers, OPEIU, AFL-CIO;
- American Society of Appraisers;
- American Society of Farm Managers and Rural Appraisers;
- MBREA | The Association for Valuation Professionals; and
- RICS.
