NCUA Board Approves Increase of Appraisal Threshold to $400,000

The NCUA board on Thursday approved a final rule that increases the threshold of residential purchases that would require an appraisal from $250,000 to $400,000.

The board issued a proposed rule in November 2019 and the final rule adopts that proposal without changes.

Banking regulators already use the $400,000 threshold.

The rule is “prudent and strikes the right balance,” Board Chairman Rodney Hood said.

“This rule does not undermine consumer protection,” Hood added.

He said when he talks with credit union officials, they have often expressed support for the proposal. He said the need for appraisals create problems for some homebuyers, adding that it may take six to eight weeks to obtain an appraisal in rural areas.

Board Member Todd Harper opposed the final rule, saying the agency should only focus on how the agency responds to the current crisis.

“This final rule does not directly respond to the COVID-19 pandemic,” he said.

He added that the new threshold far exceeds a threshold that had been envisioned in the Dodd-Frank Act.

Agency staff said the threshold had not been increased since 2011. The agency estimated that the rule would exempt about 46,000 residential real estate transactions, which would translate into 0.9% of federally insured credit union assets.

In comments filed with the agency, credit unions and trade associations endorsed the proposal. Five commenters opposed the rule, with four comments coming from appraisal companies and appraisal trade organizations.

The agency board also adopted several interim final rules in response to the coronavirus crisis.

The board adopted several temporary exemptions to the appraisal requirements for an appraisal by a certified or licensed appraiser.

One interim final rule temporarily defers certain real estate appraisals and evaluations for up to 120 days.

The rule is similar to a rule that has been adopted by federal banking agencies.

Board members emphasized that the temporary rule is intended to address the need for credit union members to have access to credit. However, they added that the rule simply defers the requirement for an appraisal.

The board also adopted a temporary rule that will expand the ability of federally-insured credit unions to purchase loans and participation in loans in an effort to enhance the liquidity needs of the credit union system.

The rule increases the maximum aggregate amount of loan participations that a federally-insured credit union may purchase from a single originating lender without seeking a waiver from the agency. It increases the maximum to the greater of $5 million or 200% of the credit union’s net worth.

The rule also tolls the required timeframes for the occupancy or disposition of properties not being used for credit union business or that have been abandoned. Agency officials said such a change is needed because many credit unions now have employees working from home.