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NAFCU to NCUA: Keep parity with banks on residential real estate appraisals
"NAFCU recommends that the NCUA continue 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," wrote NAFCU's Kaley Schafer to the NCUA Monday 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.
The NCUA issued the proposal during a board meeting in November of last year 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 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, NAFCU's regulatory affairs counsel. However, she added that a specific "threshold for transactions that are partially insured or guaranteed would be helpful."
NAFCU, in a Regulatory Alert, noted that consumer protections would remain in place by requiring written estimates of market value for transactions under the threshold level, and would effectively remove the appraisal requirement for all rural transactions.
Real estate appraisals were among the top regulatory issues NAFCU recommended the NCUA Board consider last year, and the board in July 2019 finalized a NAFCU-supported rule to increase commercial real estate appraisals from $250,000 to $1 million for non-residential, rural real-estate-related financial transactions.