NCUA Amends Rule on Real Estate Appraisals for Certain Transactions
NCUA is amending the rule requiring real estate appraisals for certain transactions. The final rule accomplishes four objectives: increasing the threshold below which appraisals are not required for commercial real estate transactions from USD 250,000 to USD 1,000,000, restructuring the rule to enhance clarity, exempting from the rule certain federally related transactions involving real estate in a rural area, and making conforming amendments to the definitions section. The final rule becomes effective on October 22, 2019.
NCUA had proposed to amend its appraisal regulation on October 03, 2018 and the comment period on this regulation closed on December 03, 2018. NCUA received 87 comment letters in response to the proposed rule. These comment letters were received from credit unions, credit union trade associations, state credit union leagues, appraisal companies, appraisal trade organizations, individuals, and other industry organizations. This final rule adopts the proposed rule with one material change; the final rule does not adopt the proposed modification to the exemption for existing extensions of credit. Accordingly, the final rule amends part 722-Appraisals of the NCUA regulations to:
- More clearly indicate when a written estimate of market value, an appraisal conducted by a state-licensed appraiser, or an appraisal conducted by a state-certified appraiser is required
- Incorporate the relevant changes enacted by the EGRRCP Act
- Provide relief from appraisal requirements for commercial real estate-related financial transactions
Additionally, the NCUA is adding and removing various definitions in support of the changes and for improved clarity. Further, the final rule substantially reorganizes § 722.3 for ease of use.
Related Link: Federal Register Notice
Effective Date: October 22, 2019
Keywords: Americas, US, Banking, Real Estate Appraisals, EGRRCP Act, Commercial Real Estate, Credit Risk, NCUA
Previous Article
EP Examines Policy Options to Improve Legal Certainty for BlockchainRelated Articles
EIOPA Report Analyzes Use and Impact of Long-Term Guarantee Measures
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
BIS, SNB, and SIX Announce Successful Completion of CBDC POC
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA Sets Out Treatment of Certain Banking Book Positions Under FRTB
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA Consults on Integrating Climate Change into SII Standard Formula
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU Issues Corrigenda to Investment Firms Directive and Regulation
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS Proposes Changes to Rules Arising from Banking Amendment Act
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA to Elaborate on Approach to Transposition of CRD5 by Mid-December
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ Consults on Aspects of Insurance Act, Solvency Standards & IFRS17
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB Sets Out Work Program for 2021-2023
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.
