Standards board expected to scale back requirements for certified appraisals.

WASHINGTON - The national board that sets appraisal standards is expected to propose today relaxing requirements for a certified appraisal.

The move could make it simpler and cheaper for banks to get property valuations. It also could defuse a controversy raging at the bank regulatory agencies: whether to raise the threshold for loans that must have a certified appraisal.

Meeting here today, the Appraisal Foundation's standards board is expected to release an "exposure draft" that, once adopted, would let appraisers give clients something less than the standard, rigid appraisal. Just what "appropriate departures" from appraisal standards will be allowed is expected to be spelled out in today's draft.

$250,000 Threshold Proposed

To make it easier and less expensive to get credit, regulators in May said they wanted to exempt all loans of less than $250,000 from rules requiring an appraisal by a certified or licensed appraiser. The current exemption threshold is $100,000.

Business loans of less than $1 million also would be exempt from appraisal rules, so long as the real estate backing the loan is not the primary source of repayment, according to the proposal.

Banks cheered the move, but the appraisal industry, consumer groups, and lawmakers like Rep. Charles Schumer, D-N.Y., joined forces to oppose the changes. That fierce criticism forced the agencies to reevaluate their plans.

A final rule was expected in September, but its adoption was pushed back when regulators decided to reissue their proposal for a second round of comments. The reason: to build a sounder case for lifting the threshold.

Waiting for Appraisal Board to Act?

But more than a month has passed, and the proposal has not resurfaced. It could be that regulators were waiting to see what the standards board would do, said Donald E. Kelly, vice president for Washington operations at the Appraisal Institute.

The standards board's change could affect the bank regulators' rule, Mr. Kelly said Monday. If a bank were allowed to get an appraiser to give it something less than a certified appraisal, the need to reduce the threshold is not as great, he said.

"This, in our view, solves the problem," he said.

"It would be very good for our members," said John Rasmus, manager of agency relations at the American Bankers Association. "Bankers would have a greater world of individuals to select from to do [property] evaluations."

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