The Appraisal Institute (AI) has issued a strong objection to a proposal to raise residential appraisal thresholds.
The statement follows a proposal by the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve to increase the threshold at which residential home sales require an appraisal to $400,000 from $250,000. The rule would not apply to loans wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government-sponsored enterprise.
“Congress just considered establishing a residential appraisal exemption and instead chose to enact a vastly different allowance involving appraisers in rural areas. This proposed rulemaking flies in the face of this action, and recreates the same type of environment that led to the housing crisis,” said AI President James Murrett.
Murrett said the proposed increase threatens the role appraisers play in real estate transactions and undermines the risk-mitigation services that appraisers provide clients and users of appraisal services.
“Raising the threshold means more evaluations will be allowed in place of appraisals,” Murrett said. “The Appraisal Institute anticipates that will result in a return to the loan production-driven environment seen during the lead-up to the financial crisis, where appraisal and risk management were thrust aside to make more – not better – loans. Apparently, the FDIC has learned nothing from that experience.”