The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) are requesting public comment on a proposed rule to raise the threshold level, at or below which appraisals would not be required for commercial real estate transactions, from $250,000 to $400,000. Comments must be received 60 days after the publication date in the Federal Register.
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“Title XI”) directs the Agencies to adopt regulations regarding appraisals of federally related transactions, and these regulations identify categories of real estate-related financial transactions that do not require an appraisal. As it currently stands, all real estate-related transactions with a value of $250,000 or less do not require an appraisal. This exemption encompasses all real estate-related transactions, and has not been increased since 1994. The Agencies’ proposal would establish a separate threshold for commercial real estate and raise the minimum to $400,000. The definition of “commercial real estate transactions” would include any “real estate-related financial transaction” as defined in Title XI appraisal regulations, excluding any loans secured by a 1 to 4 family residential property.
The Agencies request comment on a wide array of questions, including, the proposed definition of commercial real estate transaction, whether the Agencies should consider evaluating the current appraisal threshold for 1-to-4 family residential properties, and the implications of the proposed exclusion of construction-to-permanent loans from the definition of commercial real estate transaction.
The entire Request for Public Comment can be found here: https://www.fdic.gov/news/board/2017/2017-07-18-notice-dis-a-fr.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.