Mortgage Bankers Association backs credit union appraisal plan
The Mortgage Bankers Association is backing the National Credit Union Administration’s proposal to raise the threshold for appraisals on residential mortgages at CUs.
The credit union regulator has maintained an appraisal threshold exemption of $250,000 on residential mortgage loans since 2002 but in November the NCUA board voted unanimously to raise that limit to $400,000 in order to align the agency with other banking regulators.
“The proposed change would improve the efficiency of the mortgage lending process, while reducing costs for consumers,” Pete Mills, MBA’s SVP of residential policy and member engagement, wrote in a Jan. 28 letter. “In conjunction with this amended threshold, we urge NCUA to continue its efforts to preserve the safety and soundness of residential real estate lending.”
Around 77% of credit union real estate loans are exempt from appraisal requirements below the $250,000 benchmark under the current rule, but the proposed changes would exempt 94% of mortgages.
The MBA encouraged the credit union regulator to maintain consistency with other banking agencies to avoid disparities in appraisal standards, which could lead to borrowers favoring one set of lenders over another. To prevent that, the MBA recommended NCUA coordinate future appraisal threshold updates, notices and proposed rulemakings with other federal banking agencies.
Mills said in the letter he believes these proposed changes will be a benefit not just for the credit union industry but for all consumers.
“[R]aising the threshold will positively impact various participants in the mortgage market – most notably consumers – by expediting valuations and lowering closing costs,” Mills wrote.
Comments for the proposed rule were due on Jan. 28. The NCUA will issue a final rule once the comments are reviewed.