December 04, 2018

NAFCU supports NCUA's real estate appraisal rule

Yesterday, NAFCU Senior Counsel for Policy and Research Andrew Morris regoffered the association's general support for the NCUA's proposed rule regarding real estate appraisal requirements, which attempts to make the commercial real estate appraisal standards for credit unions more consistent with the changes other regulators have made for banks.

The proposal increases the threshold for commercial real estate-related financial transactions to be exempt from formal appraisal requirements from $250,000 to $1 million, among other reforms.

“NAFCU anticipates that the new threshold for required appraisals in commercial real estate transactions will address appraiser capacity issues that have been observed in smaller markets, and which have contributed to unnecessary delays and increased costs for borrowers,” said Morris.

Morris also encouraged the NCUA to raise the $250,000 appraisal threshold for residential real estate transactions. A recent proposal jointly issued by the other banking agencies which increases the appraisal requirement for residential transactions to $400,000 should prompt NCUA to reconsider the current threshold, Morris wrote.

Additionally, the proposal would:

  • restructure the NCUA's appraisal regulation to more clearly clarify when a written estimate of market value, an appraisal conducted by a state-licensed appraiser or an appraisal conducted by a state-certified appraiser is required;
  • exempt from the agency's appraisal rule certain federally related transactions involving real estate that is located in a rural area, valued below $400,000 and where there is no state-certified or licensed appraiser available (making it consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155)); and
  • verify certain conforming amendments to the definitions section of the current regulation.