news.cuna.org/articles/117160-increase-to-residential-appraisal-threshold-saves-time-money

Increase to residential appraisal threshold saves time, money

January 23, 2020

Increasing the residential appraisal threshold will reduce regulatory burden for credit unions, resulting in both transaction cost and time savings for credit unions and their members, CUNA wrote NCUA Thursday. NCUA issued a proposal raising the threshold to $400,000 at its November meeting, which followed an October letter from CUNA to NCUA requesting such a rulemaking.

Under the proposal, the residential appraisal threshold would be increased from $250,000 to $400,000. However, the proposal would continue to require credit unions to obtain written estimates of market value for transactions exempted from the appraisal requirement by the increased threshold.

“Obtaining an appraisal for a real estate transaction adds to the cost of the transaction, which is often passed on to the borrower. In addition, the need for an appraisal can delay the closing of a transaction when an appraiser cannot complete the appraisal in a timely manner,” the letter reads. “We believe increasing the residential appraisal threshold will reduce regulatory burden for credit unions, resulting in both transaction cost and time savings for credit unions and their members.”

The proposal is similar to a final rule adopted by federal banking regulators last year, and CUNA’s letter requests NCUA include language identical to the banking rule in the final rule.

Specifically, use the language “at or below” the $400,000 threshold, as the banking agencies do. NCUA’s proposal simply uses “below.”

“Failure to maintain parity could cause credit union members to pursue mortgage loans at financial institutions where appraisals are not required for residential real estate transactions below $400,000,” the letter reads.