ALEXANDRIA, Va.—NCUA is being urged by both NAFCU and NASCUS to set an appraisal threshold that provides parity with banks and offer additional commentary on what constitutes a complex transaction to provide credit unions with greater clarity.
Kaley Schafer, NAFCU regulatory affairs counsel, wrote to NCUA in response to its proposed rulemaking to raise the threshold requirement to $400,000 for an appraisal of a single one-to-four family residential property.
NCUA issued the proposal during a board meeting in November of 2019 in an effort to provide parity with banks. The proposed rule followed a joint final ruling in September 2019 issued by bank regulators that increased the threshold.
NAFCU said it has supported an increased threshold of $400,000 as it would "reduce regulatory burdens for credit unions through this proposal by minimizing transaction costs, improving access to credit by reducing closing times, and accurately reflecting risk in the residential real estate market while preserving safety and soundness," said Schafer. However, she added a specific "threshold for transactions that are partially insured or guaranteed would be helpful."
The NCUA board in July 2019 finalized a rule to increase commercial real estate appraisals from $250,000 to $1 million for non-residential, rural real-estate-related financial transactions.
NASCUS Recommendation
Separately, NASCUS said in its comment letter on Proposed Rule: Real Estate Appraisals (RIN 3133-AE98) that it supports NCUA’s proposal to increase the threshold level below which licensed or certified appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000.
“We find the proposed rule balances safety and soundness, consumer protections, and the ability of borrowers and lenders to close transactions in an efficient and cost-effective manner, while establishing a threshold appropriate for today’s residential real estate market” wrote NASCUS executive vice president and general counsel Brian Knight.
NASCUS said it actually supports an even higher threshold.
“We believe there is merit to considering $500,000 as a threshold. However, we do not fault NCUA for taking a more cautious approach,” the letter adds.
Knight said “state regulators remain committed to working with NCUA to ensure all lending is conducted in a safe, sound and efficient manner and encourages NCUA to continue working with state agencies to address appraisals.”