US Agencies Propose Rule on Appraisals for Real Estate Transactions
US Agencies (FDIC, FED, and OCC) proposed a rule to increase the threshold level at or below which appraisals would not be required for the residential real estate transactions from USD 250,000 to USD 400,000. Comments will be accepted for 60 days from publication in the Federal Register.
As per the proposal, Agencies would continue to require evaluations that are consistent with safe and sound business practices for transactions exempted by the increased threshold. Additionally, the proposal would require regulated institutions to obtain evaluations for transactions secured by residential property in rural areas that have been exempt from the US Agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection (EGRRCP) Act (rural residential appraisal exemption). Pursuant to the Dodd-Frank Act, the proposed rule would amend the US 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.
The proposal to raise the residential threshold is based on consideration of available information on real estate transactions secured by a single 1-to-4 family residential property (residential real estate transactions), supervisory experience, comments received from the public in connection with the EGRRCP Act process, and the rule-making to increase the appraisal threshold for commercial real estate appraisals (CRE Final Rule). The US Agencies are proposing several conforming and technical amendments to their appraisal regulations. The US Agencies also proposed to define a residential real estate transaction as a real estate transaction secured by a single 1-to-4 family residential property, which is consistent with the current references to appraisals for residential real estate in the US Agencies’ appraisal regulations and in Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI). Adding this definition would not change any substantive requirement, but would provide clarity to the regulation.
The US Agencies proposed to add the rural residential appraisal exemption to the list of transactions that do not require appraisals. The proposed rule would require evaluations for transactions exempt from the US Agencies’ appraisal requirement by this exemption, which is consistent with the requirement for regulated institutions to obtain an evaluation for certain other exempt residential real estate transactions. Furthermore, the US Agencies are proposing to implement the appraisal review provision in Section 1473(e) of the Dodd-Frank Act, which amended Title XI to require that the US Agencies’ appraisal regulations include a requirement for institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice. The proposed rule would implement this statutory requirement, which is consistent with the US Agencies’ long-standing recognition of the importance of appropriate appraisal reviews for safety and soundness. Under Title XI, the US Agencies must receive Bureau of Consumer Financial Protection (BCFP) concurrence that the proposed threshold level provides reasonable protection for consumers who purchase 1-to-4 unit single-family residences. Accordingly, the US Agencies are consulting with BCFP regarding the proposed threshold increase and will continue this consultation in developing the final rule.
Related Links
Comment Due Date: February 05, 2019
Keywords: Americas, US, Banking, Dodd Frank Act, EGRRCP Act, Residential Real Estate, Appraisal Requirements, Exemption Threshold, US Agencies
Previous Article
GLEIF Publishes Version 1.5 of Registration Authorities ListRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
