After deliberating for a year and completing a very thorough process, federal regulators approved a proposal to increase the price threshold required for home appraisals from $250,000 to $400,000.
A joint statement released from the Federal Deposit Insurance Corporation, the Office of Comptroller of the Currency and the Board of Governors of the Federal Reserve said, “Given price appreciation in residential real estate transactions since 1994 (the last time this threshold was raised), the change will provide burden relief without posing a threat to the safety and soundness of financial institutions.”
This new threshold of $400,000 and new rules DO NOT apply to loans either wholly or partially insured or guaranteed by government agencies including Freddie Mac, Fannie Mae, Federal Housing Authority (FHA) Department of Housing and Urban Development (HUD and Department of Veteran Affairs (VA).
Rather than appraisals, new rules in conjunction with this new threshold require that lending institutions “obtain an evaluation to provide an estimate of the market value of the real estate collateral.” Translated into understandable language, this means that lenders must have an evaluation of the property by a person who is competent, independent of the transaction and who has “relevant” experience and knowledge of the market, location and type of real property being evaluated.”
Such exemptions mean that approximately 72% of all eligible transactions would not require an appraisal while 28% would.
Obviously, those favoring these new exemptions and rules included financial institutions, financial institution trade associations and state banking regulators. Those against included appraisers, appraiser trade organizations, individuals and consumer advocacy groups.
The Consumer Financial Protection Bureau signed off on these new thresholds and rules.
Thanks to HousingWire’s Ben Lane for source data.
Also read: https://timandjulieharris.com/2019/09/25/podcast-how-to-sell-the-unsellable-listing-part-2.html, https://timandjulieharris.com/2019/09/22/opendoor-acquires-title-and-escrow-company.html, https://timandjulieharris.com/2019/09/30/podcast-how-to-overcome-your-fear-of-rejection-3.html