US Agencies (FDIC, FED, and OCC) adopted the final rule to amend regulations requiring appraisals of real estate for certain transactions. The final rule increases the threshold level at or below which appraisals are not required for residential real estate transactions from USD 250,000 to USD 400,000. The provisions of the final rule will be effective from October 09, 2019, with the exception of provisions related to appraisal review and the evaluation requirement related to the rural residential exemption, which become effective from January 01, 2020.
The final rule defines a residential real estate transaction as a real estate-related financial transaction that is secured by a single one-to-four family residential property. For residential real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The final rule makes a conforming change to add to the list of exempt transactions the transactions secured by residential property in rural areas that have been exempt from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. The final rule requires evaluations for these exempt transactions. The final rule also amends the agencies’ appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).
As part of the response to a December 2018 consultation, the agencies collectively received over 560 comments about the proposal to increase the residential real estate appraisal threshold, with the comments addressing a variety of issues. Comments from financial institutions, financial institution trade associations, and state banking regulators generally supported the proposed increase. Comments from appraisers, appraiser trade organizations, individuals, and consumer advocate groups generally opposed the proposal to increase the threshold. The agencies also received a few comments that are addressed separately concerning the proposed requirement to obtain evaluations for transactions that qualify for the rural residential appraisal exemption or to subject certain appraisals to appropriate review for compliance with USPAP. After carefully considering the comments and conducting further analysis, the agencies are adopting the final rule as proposed.
US Agencies have consulted with, and received concurrence from, CFPB on the increased threshold. CFPB released a letter concurring that the increased threshold provides reasonable protection for consumers who purchase one-to-four unit single-family residences.
Effective Date: October 09, 2019/January 01, 2020
Keywords: Americas, US, Banking, Dodd-Frank Act, EGRRCP Act, Residential Real Estate, Appraisal Requirements, Exemption Threshold, US Agencies
The European Commission (EC) published three Delegated Regulations (2021/2153, 2021/2154, and 2021/2155) to supplement the Investment Firms Directive (IFD or Directive 2019/2034).
The Financial Stability Board (FSB) published a report that presents results of the sixth non-bank financial intermediation monitoring exercise in the Americas.
The Bank for International Settlements (BIS) published the December issue of the Quarterly Review, which analyzes the non-bank financial intermediation mechanisms that could undermine financial stability.
The Bank of England (BoE) opened the Alternative Liquidity Facility, or ALF, for deposits from the participating UK-based Islamic banks for the first time.
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Banking Authority (EBA) launched three consultations on technical aspects of the revised framework capturing interest rate risks for banking book (IRRBB) positions, with the comment period ending on April 04, 2022.
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The European Banking Authority (EBA) published the sample of banks for the mandatory Basel III monitoring exercise, which will refer to the December 2021 data.
The Board of Governors of the Federal Reserve System (FED) is adopting a proposal to revise and extend for three years the Complex Institution Liquidity Monitoring Report (FR 2052a) for banks.
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.