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July 19, 2017

The US Agencies (FED, FDIC, and OCC) proposed to raise the threshold for commercial real estate (CRE) transactions requiring an appraisal to USD 400,000, from the current threshold of USD 250,000. The agencies believe raising this threshold for commercial real estate transactions 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. Comments will be accepted for 60 days from the publication of this notice in the Federal Register.

The proposal would require that commercial real estate transactions at or below the threshold receive an evaluation, instead of an appraisal. Evaluations are less detailed than appraisals, do not require completion by a state licensed or certified appraiser, and provide a market value estimate of the real estate pledged as collateral, as defined by agency guidance. This proposal responds, in part, to the concerns of the financial industry representatives that the current exemption level had not kept pace with price appreciation in the commercial real estate market.

 

Related Link: Notice of Proposed Rulemaking (PDF)

Keywords: Americas, United States of America, Banking, CRE, US Agencies

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