The Appraisal Institute reports, they are amongst 17 other organizations that are STRONGLY opposing the National Credit Union Administration’s proposal to quadruple - from $250,000 to 1 million - the appraisal threshold for non-residential loans.
There are concerns that the threshold increase would drastically lower the number of non-residential real estate loans requiring an appraisal.
The Appraisal Institute wrote a letter on Dec. 3rd to the NCUA stating “The proposed rule is written purely through the lens of regulatory relief- not safety and soundness. It ignores the fact that that the United States suffered through a financial crisis less than a decade ago. If anything the current market conditions beg for heightened due diligence by regulated institutions today- not a loosening of a fundamental risk-management activity.”
Earlier this year, the federal banking regulatory agencies - consisting of the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve Board - approved to increase the commercial appraisal threshold from $250,000 to $500,000.
Again in the letter states “We are deeply concerned the NCUA proposal, if finalized at $1 million for commercial real estate transactions, will result in a regulatory ‘arms race’ between the the Agencies and the NCUA” Basically, this will result in the NCUA (which is the agency that has the least direct experience in overseeing business and commercial real estate lending) directing the appraisal policies for the entire system.
This proposal, they fear, will impact not only credit unions and banks, but also lenders of SBA loans.
To read the full letter click HERE:
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