Removing Barriers Blog

CUNA Flags Issues with NCUA Appraisal Proposal
Posted December 03, 2018 by CUNA Advocacy

Today, CUNA filed a comment letter in response to NCUA’s proposal to amend part 722 on real estate appraisals. The proposed rule would:

  1. Increase the threshold below which appraisals would not be required for non-residential real estate transactions from $250,000 to $1,000,000.
  2. Restructure the appraisal regulation to clarify its requirements for the reader.
  3. Exempt from the appraisal regulation certain federally related transactions involving real estate where the property is located in a rural area.
  4. Make certain conforming amendments to the definitions section.

We support the agency’s effort to reorganize part 722 to make it easier for the reader to determine whether, and if so by whom, an appraisal is required.

While we are largely supportive of the proposed changes, there are a few substantive changes we flag in our letter as potentially problematic. For example, the regulation currently provides an exemption from the appraisal requirements for certain transactions that involve an existing extension of credit, provided explicit criteria are met. The proposal would amend this exemption to instead make it available only if the transaction is not considered a new loan under GAAP. We believe this proposed change reduces flexibility and may make fewer transactions eligible for the exemption; further, we fail to see any need for the proposed change.