Three federal bank regulators are proposing to raise the threshold for residential real estate transactions that require an appraisal from $250,000 to $400,000 in order to ease regulatory burdens and keep pace with home prices.
The Federal Deposit Insurance Corp. and the Office of Comptroller of the Currency announced the proposal Tuesday. The third agency, the Federal Reserve Board, is expected to finish its consideration of the notice soon.
In separate press releases, the FDIC and OCC said increasing the threshold by $150,000 would make appraisal requirements less burdensome without threatening the safety and soundness of financial institutions.
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.
Read more in American Banker.