Guidelines outlining the new, higher threshold for real estate appraisals and evaluations were issued jointly by banking regulators Nov. 7.
The guidelines supersede the agencies appraisal and evaluation guidelines issued in 1992 and arrive six months after regulators mutually agreed to increase the minimum appraisal for real estate transactions to $250,000, up from $100,000.
Although the increase pushes the appraisal requirement far above FHA, VA and conventional loan limits, its effect on the mortgage marketplace will be almost nil, mostly because FHA, VA, Fannie Mae and Freddie Mac require a certified appraisal as a condition of guaranteeing or purchasing a mortgage loan.
The regulators, which include the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Office of Thrift Supervision and the Federal Reserve Board, also revised their appraisal guidelines while incorporating the higher threshold.
Among these changes is a rule allowing banks to permit an evaluator--who may be an appraiser performing more limited research--to conduct only a portion of the standard three-part appraisal.
In many cases, such as a refinancing, bankers who don't have a need for full appraisals may opt for just a portion of one. For example, the income-based approach can be used in an assessment rather than the market- or cost-based approaches that usually accompany most appraisals as a whole.