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
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