Are Appraisals Required by Law

Under previous rules in place since 1994, assessments were not required for all home sales of $250,000 or less, but last year federal agencies proposed to increase the assessment threshold for the first time in 25 years. and (b) empowerment. All employees and fee examiners who conduct assessments related to federal government transactions must be certified by the state or licensed, as applicable. However, a state-certified or state-certified appraiser cannot be considered competent solely because of their certification or license. Any determination of competence shall be based on the experience and level of education of the person in relation to the particular assessment mandate for which it is envisaged. Requires that all loans granted under the Rural Energy for America program comply with USPAP assessments. For loans of $600,000 or more, a fully self-contained appraisal must be performed by a specialized appraiser. For loans of $600,000 or less, a full summary assessment can be conducted. 4. Timeline.

Paragraph 1002.14(a)(1) requires the creditor to „provide” the applicant with copies of assessments and other written assessments „immediately after closing” or no later than three business days before closing (for closed loans) or opening the account (for open loans), whichever comes first. Any complex appraisal for residential real estate transactions conducted as part of federal government transactions requires a state-certified appraiser if the value of the transaction is greater than $400,000. A regulated institution may assume that valuations of residential real estate transactions are not complex unless it has readily available information that a particular valuation will be complex. The regulated institution is responsible for conclusively determining whether the assessment is complex. If, during the course of the appraisal, a chartered appraiser identifies factors that would cause the property, property form or market conditions to be considered atypical, then either: (e) transactions that require a state-certified or licensed appraiser. All reports for federal government transactions that do not require the services of a crown-certified appraiser are prepared by a crown-certified appraiser or a crown-approved appraiser. The agencies are increasing the threshold from $250,000 to $400,000 or less, beyond which a Title XI assessment is not required for residential real estate transactions to reduce regulatory burdens in a manner consistent with the safety and soundness of financial institutions. To ensure that the safety and soundness of Start Printed Page 53594 regulated institutions are protected, agencies require assessments for transactions that are exempt from the high threshold for valuing homes. The definitive regime also requires assessments for transactions exempted from the rural residential assessment exemption.

In order to fulfill the agencies` legal responsibility under the Dodd-Frank Act, the agencies also complement the assessment requirements with the requirement that assessments be subject to appropriate verification of compliance with the USPAP. Commentators who oppose an increase in the valuation threshold for residential real estate have argued that the proposal would increase risks for borrowers, financial institutions, the financial system and taxpayers. Several commentators argued that the increased risk was not justified by relief resulting from an increase in the threshold. As described in more detail below, many opposition commentators claimed that the proposal would have a negative impact on consumers. Many of these comments related to views that reviews do not adequately replace reviews. The agencies are also finalizing, as proposed, the requirement to receive an assessment for transactions eligible for the rural housing assessment exemption and the requirement that assessments for federal government transactions be subject to appropriate verification for COMPLIANCE with the USPAP. The final regulation also makes several technical changes that comply with the valuation rules. These changes are explained in more detail below in the order in which they usually appear. The effective date of the rule is the first day after it is published in the Federal Register, with the exception of the valuation requirement for transactions exempted from the rural housing valuation exemption and the assessment review provision, which will come into effect on January 1, 2020. The proposed rule would have amended the assessment rules for organizations to reflect the exemption from the assessment of rural residential areas under section 103 of the EGRRCPA in the list of operations exempted from the assessment requirement of organizations.

The amendment to this provision would have been a technical change that would not have changed an important requirement, since the legislative provision is self-effective and the proposed increase in the threshold to $400,000 would include loans that would otherwise be eligible for the rural housing assessment exemption under section 103. In addition, the proposed rule would have required assessments for transactions exempted from the assessment requirement of agencies under the rural housing assessment exemption under section 103 of the EGRRCPA. The agencies suggested that financial institutions receive ratings for these transactions because the assessments protect the safety and soundness of financial institutions. Requires that assessments of biorefinery support loans within the U.S. Department of Agriculture`s Rural Business-Cooperative Service and Rural Utilities Service be stand-alone assessments conducted by specialized evaluators. Organizations received feedback on these compliant changes to clarify whether certified appraisers would be required for complex appraisals of residential real estate transactions over $400,000 or transactions over $400,000. As set out in the text of the rule, the requirement only applies to transactions over $400,000. The agencies have not received any further comments on these proposed technical and compliant amendments and accept the proposed technical amendments as final. An institution may use sampling and verification procedures to verify the seller`s assurances and guarantees that the underlying loan assessments of a mortgage package comply with the organizations` valuation rules and comply with an institution`s oversight guidelines and internal policies.