ALEXANDRIA, Va.–The NCUA board has voted unanimously to act on two rules related to real estate appraisals.
The first rule raises the real estate appraisal threshold from $250,000 to $400,000 and, in addition to providing parity with banks.
The second rule, which had been in place as an interim final rule, allows credit unions to defer the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions amid the coronavirus pandemic.
The appraisal rule expires at year-end, although agency staff indicated an extension may be considered.
NCUA Chairman Rodney Hood said the final rule on appraisals provides flexibility to members and credit unions, as COVID-19 restrictions have affected borrowers and lenders alike.
“Access to credit is the lifeline of many communities and families,” said Hood. “By deferring appraisals and evaluations for up to 120 days, this rule will bring relief to homeowners and businesses, to purchase property or gain access to equity.”
Hood noted the forbearance rate on mortgages made by credit unions remains relatively low at 3.6%, which is approximately half the rate being seen by other lenders. He said the delay also allows CUs to efficiently operate their real estate lending businesses.
In response to a question from Hood related to the Dec. 31 sunset of the rule, NCUA staff said a number of comment letters received also inquired about an extension, and staff said as year-end approaches the agency will consider extending the deferrals “as conditions warrant.”
Harper Comment
NCUA Board Member Todd Harper said the rule “makes a lot of sense,” as mortgage rates are hitting new lows at the same time COVID-19 restrictions are making it more difficult to get appraisals in some markets.
Allowing the deferrals allows more members to get loan refinancings and to tap home equity, he said.
Harper emphasized the deferral is a temporary move and is not a waiver of the need for an appraisal, and he said credit unions will need to take steps to document the value in the required deferral timeframes.