The Guidelines provide regulated institutions with guidance on establishing parameters for ordering Title XI appraisals for transactions that present significant risk, even if those transactions are eligible for evaluations under the regulation. One commenter expressed the view that an increase in the commercial real estate appraisal threshold would be contrary to consumer protection objectives. Due to the manner in which IDIs report information on nonfarm nonresidential (NFNR) loans in the Call Report, this data set does not enable the agencies to calculate the percentage of loans that would fall under any threshold amount between $250,000 and $1 million. 57. Based in part on this analysis, the agencies conclude that the exposure of financial institutions will remain at acceptable levels with a $500,000 commercial real estate appraisal threshold. For transactions at or below the threshold, regulated institutions will be given the option to obtain an evaluation of the property instead of an appraisal. Commenters supporting a threshold increase stated that an increase would be appropriate, given the increases in real estate values since the current threshold was established, the cost and time savings to lenders and borrowers the higher threshold would provide, and the burden relief it would provide to financial institutions in rural and other areas where there are reported shortages of state licensed or state certified appraisers, which may have caused transaction delays and increased lending costs. Comments may be sent to: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Attention: 1557-0190, 400 7th Street SW, Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. Any associated recordkeeping costs are unlikely to change for small FDIC-supervised entities as the amount of labor required to satisfy documentation requirements for an evaluation or an appraisal is estimated to be the same at about five minutes for either an appraisal or evaluation. One commenter asserted that it is not true that evaluations contain less detailed information or take less time to review than appraisals. Additionally, commenters may send a copy of their comments to the OMB desk officer for the PRA Agencies by mail to the Office of Information and Regulatory Affairs, U.S. Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503; by fax to (202) 395-6974; or by email to email@example.com. 1. Be sure to leave feedback using the 'Feedback' button on the bottom right of each page! • Have the appraiser visit the interior of the property and provide a written One commenter urged the agencies to review the appraisal requirements of other federal agencies and pursue ways to make appraisal requirements across agencies more consistent. 61. FDIC: You may submit comments, which should refer to “Real Estate Appraisals, 3064-0103” by any of the following methods: Public Inspection: All comments received will be posted without change to http://www.fdic.gov/regulations/laws/federal/ including any personal information provided. 20. electronic version on GPO’s govinfo.gov. As discussed in detail in Section II.B of the SUPPLEMENTARY INFORMATION, the cost of obtaining appraisals and evaluations can vary widely depending on the size and complexity of the property, the party performing the valuation, and market conditions where the property is located. 14. However, because the final rule does not contain any new recordkeeping, reporting, or compliance requirements, the final rule will not impose costs on any OCC-supervised institution. The President of the United States issues other types of documents, including but not limited to; memoranda, notices, determinations, letters, messages, and orders. Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI) requires the Agencies to adopt regulations prescribing standards for appraisals used in connection with federally related transactions within the jurisdiction of each agency, and that they be performed by certified or licensed appraisers. Housing and Community Development Act of 1992, Pub. Residential construction loans secured by more than one 1-to-4 family residential property will be considered commercial real estate transactions subject to the higher threshold. The agencies also considered the cost savings that IDIs would experience by obtaining evaluations instead of appraisals and set the threshold at a level designed to provide significant burden relief without sacrificing safety and soundness. New Documents Revise the authority citation for part 323 to read as follows: Authority: documents in the last year, 69 Some commenters who were supportive of the proposal also discussed the role of appraisals and appraisers. This prototype edition of the However, the regulatory flexibility analysis otherwise required under the RFA is not required if an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined in regulations promulgated by the Small Business Administration (SBA) to include commercial banks and savings institutions, and trust companies, with assets of $550 million or less and $38.5 million or less, respectively) and publishes its certification and a brief explanatory statement in the Federal Register together with the rule. The agencies explained in the proposal that they were not proposing any threshold increases for transactions secured by a single 1-to-4 family residential property (residential transactions) or QBLs in connection with this rulemaking.  25. Any commercial real estate transaction with a value in excess of the $500,000 threshold is required to have an appraisal by a state licensed or state certified appraiser. Accordingly, the agencies proposed to require that regulated institutions entering into commercial real estate transactions at or below the proposed commercial real estate appraisal threshold obtain evaluations that are consistent with safe and sound banking practices unless the institution chooses to obtain an appraisal for such transactions. The proposed $400,000 threshold would have increased the percentage of exempted transactions by dollar volume from 0.5 percent, under the current threshold, to 1.2 percent. As noted above, the agencies have issued guidance on the preparation of evaluations.. Purpose [12 U.S.C. 16. In support of its opposition to the proposal, a commenter cited a 2012 U.S. Government Accountability Office (GAO) report, contending that the report found no Start Printed Page 15022support for raising the threshold. Multiple commenters noted a 2015 appraiser trade association survey of appraisal industry professionals, including chief appraisers and appraisal managers at financial institutions, which showed that the majority of those surveyed opposed increasing the current $250,000 threshold and believed that increases to the threshold could increase risk to lenders. An evaluation is not required when real estate-related financial transactions meet the threshold criteria and also qualify for another exemption from the appraisal requirements where no evaluation is required by the regulation. The data incorporated into this index covers properties across the country and across all price ranges, The agencies collectively received over 200 comments from appraisers, appraiser trade organizations, financial institutions, financial institutions trade organizations, and individuals. Based on the prior assumptions, the FDIC estimates that the final rule will affect approximately 2,003 to 5,138 transactions per year, Organizations, financial institutions regulatory agency to publish appraisal regulations information about this document reflect the CRE... This analysis asserted that appraisals can be costly and time consuming would raise safety and soundness concerns on April,... First part [ 12 U.S.C a material number of consumer transactions evidence to that... Of consumer transactions also, values presented here may not currently be in position. And Annual revenues are calculated according to SBA regulations of all NFNR loans, including those over 1... 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