WASHINGTON — Sixteen appraisal organizations have called on the federal bank regulators to hold a public meeting on a proposal to reduce the scope of residential real estate transactions that require an appraisal.
In November, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency proposed raising the threshold on transactions requiring a lender to arrange for an outside appraisal from $250,000 to $400,000. But appraisers have argued that that change could
Appraisal industry groups — including the American Society of Appraisers, the Appraisal Institute and the American Society of Farm Managers and Rural Appraisers — sent a recent letter to the bank regulatory agencies requesting a hearing to understand the reason behind the proposed increase. The groups announced the letter Thursday.
“We feel strongly that a hearing is not only appropriate but necessary for the agencies to have as complete a record as possible upon which to base their decision on regarding this proposal,” Robert Morrison, the international president for the American Society of Appraisers, said in a statement.
In releasing their proposal, the agencies had claimed it would
If adopted, the proposal would require lenders involved in residential real estate sales under $400,000 to obtain an evaluation “consistent with safe and sound banking practices” instead of an appraisal. Evaluations, which are less costly than appraisals, have been mandatory for real estate sales exempted from the appraisal requirement since the 1990s.
The proposal was developed in response to comments submitted to the agencies under the Economic Growth and Regulatory Paperwork Reduction Act. The 1996 law requires the agencies to undertake a review every 10 years to identify outdated or unnecessary rules.
However, the 16 appraisal groups said in their letter that the review of the threshold under EGRPRA had found that an increase was not warranted, in part because some stakeholders strongly opposed such a move.
The organizations also said that a change in market dynamics along with provisions in the regulatory relief bill President Trump signed in May reduced the pressure on the demand for appraisal services, rendering any further easing of regulatory burdens unnecessary.
Banks have long been concerned that appraisal exemptions were not keeping pace with home values. Smaller banks reacted positively to a similar measure the regulators finalized in April relating to commercial real estate transactions, saying it
