NCUA adopts two rules on appraisals
At its April 16, 2020 meeting, the NCUA Board adopted two rules relative to the requirement to obtain an appraisal on certain real-estate related transactions. First, the Board amended the appraisal rule to increase the threshold where a formal appraisal may be required from $250,000 to $400,000. Second, the Board adopted an interim final rule defers the requirement for obtaining an appraisal or valuation requirement for up to 120 days after closing. These changes went into effect on April 21, 2020 and are effective through December 31, 2020.
As background, NCUA’s appraisal requirements in Part 722 depend on the risk posed by the loan. The requirements defines two different levels of appraiser credentials: a state licensed appraiser or a state certified appraiser. NCUA’s appraisal regulation requires an appraisal performed by a state certified or state licensed appraiser for real-estate related financial transactions that are not complex, involves residential real estate, and the transaction value not guaranteed under a government agency or government sponsored agency is under the threshold in the rule. An appraisal by a state certified appraiser is required for all transactions of $1,000,000 or more; and “complex” residential real estate transactions where the transaction value not guaranteed under a government agency or government sponsored agency is over the threshold in the rule. For some additional background, check out this NAFCU Compliance Blog post.
Many may recall that a few months ago, federal banking regulators increased the threshold for when certain real estate transactions would require a formal appraisal from $250,000 to $400,00 back in September 2019. In contrast, NCUA still kept the threshold for credit unions at $250,000. NAFCU advocated for parity for credit unions, and NCUA’s final rule does this. This rule will become effective upon publication in the Federal Register. In Letter to Credit Unions 20-CU-10, released yesterday evening, NCUA summarized this change accordingly:
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