WASHINGTON -- When Jasper Plant Foods in Jasper, Ind., needed to mortgage four fertilizer plants worth $750,000, there were two area banks willing to provide the loans.

But there was one problem: The loan required an appraisal, but there are no appraisers in the Jasper area who are qualified for fertilizer plants.

The company got around the problem by importing an appraiser and a consultant, but that added $7,000 to the cost of the loan.

"That money is right down the tube when the deal is already done," said Michael J. Hochgesang, president of the fertilizer company.

Mr. Hochgesang was so angry, he sent his congressman a letter which the congressman, in turn, passed on to the Federal Deposit Insurance Corp.

It was added to hundreds of comments from people who favor a proposal that would only require certified appraisals for properties worth $250,000 or more -- up from the current $100,000 threshold. A decision on the proposal is expected in the fall.

Taxpayer Protection Sought

The proposal is opposed by consumer groups and the real estate industry, which argue that for every good loan that might be lost, more will be gained protecting taxpayers, who must ultimately cover losses, from risky loans.

"It's a shocking example of history repeating itself," said Bernard J. Fountain, president of the Appraisal Institute. which certifies the people who make certified appraisals. "In essence, the proposed rule frees banks and thrifts to conduct business without constraint and without requiring that they adhere to sound loan-making practices -- at the taxpayer's expense," he said.

Raising the real estate appraisal requirements is part of President Clinton's campaign to spur lending.

The same proposal would also exempt business loans of less than $1 million from appraisals if real estate is not the primary source of repayment.

Too Low for Some

While the banking industry welcomed the changes, some comment letters to the federal regulatory agencies expressed disappointment that the requirement had not been raised higher.

"We feel strongly that it should be $1 million," wrote Roman J. Gerber, executive vice president and general counsel of Banc One Corp., Columbus, Ohio.

A substantial amount of lending under $1 million is for one-family to four-family residential properties and loans to small businesses where overall loss experiences have been relatively moderate, Mr. Gerber wrote.

The National association of Realtors supported separate thresholds for commercial property and endorsed a $250,000 limit for small business.

But Stephen D. Driesler, a realtors association senior vice president, wrote that raising the $100,000 threshold for residential property would make federal financial institutions "a hiding place for residential real estate loans that cannot withstand a professional appraisal."

The lack of official appraisals would allow lenders to manipulate property values to favor selected borrowers, critics said.

The change would remove 85% of loans secured by one-family to four-family residential properties from the appraisal requirement, the Consumer Federation of America estimated.

But banks said that kind of reduction would have a dramatic effect on loans, especially for smaller banks.

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