A coalition of 18 appraisal industry trade organizations has voiced its concern over a proposal by the National Credit Union Administration (NCUA) to increase the appraisal threshold for non-residential real estate loans from the current $250,000 level to $1 million.
The coalition noted that the NCUA’s action would create a significant increase in the quantity of the number of non-residential real estate loans that would not require an appraisal and would go far beyond the recent decision by three federal banking regulatory agencies—the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve Board—to increase their respective commercial appraisal thresholds from $250,000 to $500,000. The appraisal groups warned the NCUA action would “result in a regulatory ‘arms race’” among the federal agencies and would reprise conditions that helped fuel the 2008 economic meltdown.
“The proposed rule is written purely through the lens of regulatory relief—not safety and soundness,” the trade groups wrote in a letter
to the NCUA leadership. “It ignores the fact that the United States suffered through a financial crisis less than a decade ago. If anything, the current market conditions beg for heightened due diligence by regulated institutions today—not a loosening of a fundamental risk management activity.”