The Federal Reserve Board, OCC and FDIC joint final rule exempting residential real estate transactions of $400,000 or less from appraisal requirements was published in the Federal Register. The final rule went into effect on October 9, 2019.

As previously covered, in addition to raising the appraisal threshold from $250,000 to $400,000, the final rule will:

  • require institutions whose transactions are exempted from the appraisal requirement to get an evaluation of the real property collateral that contains “sufficient information and analysis to support the decision to engage in the transaction”;
  • define a “residential real estate transaction” as one secured by a single one-to-four family residential property;
  • implement changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act by (i) adding certain transactions secured by residential property in rural areas to the list of exempt transactions, and (ii) requiring institutions to obtain evaluations on the exempt transactions; and
  • require regulated institutions to submit appraisals of federally related transactions for appropriate review to ensure compliance with the Uniform Standards of Professional Appraisal Practice (“USPAP”).

The evaluation required for the rural residential appraisal exemption and the USPAP review requirement will become effective on January 1, 2020.