September 21, 2018

NCUA proposal eases some appraisal requirements; NAFCU reviewing

NCUA boardThe NCUA on Thursday issued a proposed rulemaking amending its real estate appraisals for certain transactions. The proposal, among other changes, would increase the threshold from $250,000 to $1 million for non-residential (commercial) real estate transactions exempt from an appraisal requirement.

For those transactions that would be exempt from the appraisal requirement under this rulemaking, federally-insured credit unions would still be required to obtain a written estimate of market value of the real estate collateral to be consistent with sound lending practices.   

In April, the FDIC, Federal Reserve Board and the Office of Comptroller of the Currency jointly adopted appraisal changes for banks. The NCUA's proposal aims to make the commercial real estate appraisal standards for credit unions more consistent with the changes for banks. More on this proposal can be read in today's NAFCU Compliance Blog post.

The proposal also 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.

NAFCU is reviewing the proposed regulation and will issue a Regulatory Alert to obtain comments from credit unions. This proposal will have a 60-day comment period once published in the Federal Register. During the comment period, the NCUA wants to know whether it should consider evaluating the current threshold for one-to-four family residential transactions, and how the proposal would affect a credit union's current use of a government sponsored insurance or guarantee program.

In other actions during Thursday's meeting, the NCUA Board:

  • Received a share insurance fund quarterly report revealing an equity ratio of 1.35 percent at the end of June. The equity ratio is expected to increase to 1.39 percent when the 1 percent capital deposit adjustment is included in September.
  • Heard a board briefing on the adoption of a resolution to appoint administrative law judges.
  • Approved the Texas member business loan (MBL) rule to create consistency with the NCUA's MBL rule that became effective in June.