Federal Banking Regulators Propose to Raise Appraisal Requirement Threshold

On November 20, the federal banking regulators — the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) — released a proposed rule that would increase the appraisal exemption for single-family mortgage loans for all federally regulated banks. The agencies will accept public comments until 60 days after the notice is published in the Federal Registrar, which is expected shortly.

Currently, federally regulated banks are required to secure an appraisal for any single-family home purchase loans above $250,000. The proposed rule would raise this threshold to $400,000. The agencies argue that the current regulations can delay the process, increase costs, and are not keeping pace with evolving residential market practices. While properties valued at less than $400,000 would no longer require an appraisal, federally regulated banks would need to obtain an evaluation consistent with safe and sound banking practices. The agencies contend that such evaluations would provide a more cost-efficient way of obtaining the market value of a property and are less burdensome than requiring an appraisal.

Please reach out to NCSHA if you have any questions or input on how the proposed rule could impact your affordable housing programs.