Agencies Finalize Rule Raising Residential Real Estate Appraisal Threshold
The financial regulatory agencies last Friday issued a final rule—which takes effect the day after publication in the Federal Register—raising the appraisal threshold for residential real estate transactions from $250,000 to $400,000. The new threshold addresses numerous concerns raised by ABA and other industry stakeholders over the time and cost of appraisals.
Under the rule, transactions that qualify for the exemption still need to obtain an evaluation consistent with safe and sound banking practices. This evaluation will provide an estimate of the market value of the property without requiring the involvement of a state licensed or certified appraiser. The final rule does not apply to loans sold to or guaranteed by the FHA, HUD, VA, Fannie Mae, or Freddie Mac—which will still require an appraisal, according to each agency’s rules.
While S. 2155 created an exemption from appraisals for rural residential transactions, with this final rule, these transactions will now require an evaluation. View the final rule. For more information, contact ABA’s Sharon Whitaker.