Federal Deposit Insurance
Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-29-2017
July 19, 2017
Appraisal Threshold for Commercial Real Estate Transactions
Summary: The FDIC, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the
Currency (the Agencies) are jointly issuing a notice of proposed rulemaking titled Real Estate Appraisals (Appraisal
NPR) that will be published in the Federal Register for a 60-day comment period. The Appraisal NPR proposes to
increase the current appraisal threshold for commercial real estate (CRE) transactions from $250,000 to $400,000. The
Appraisal NPR addresses comments received during the Economic Growth and Regulatory Paperwork Reduction Act
(EGRPRA) review process, which requires that, not less than once every ten years, the Agencies, along with the
Federal Financial Institutions Examination Council, conduct a review of the Agencies' regulations to identify outdated or
otherwise unnecessary or burdensome regulatory requirements.
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies
to all FDIC-supervised institutions.
Distribution:
FDIC-Supervised Banks (Commercial
and Savings)
Suggested Routing:
Chief Executive Officer
Chief Credit Officer
Chief Risk Officer
Related Topics:
Part 323 of the FDIC Rules and
Regulations
EGRPRA Report to Congress
Attachment:
Notice of Proposed Rulemaking for Real
Estate Appraisals
Contact:
Beverlea S. Gardner, Senior
Examination Specialist, at
Bgardner@fdic.gov or (202) 898-3640
FDIC Office of the Ombudsman, at (877)
275-3342 or ombudsman@fdic.gov
Note:
FDIC Financial Institution Letters (FILs)
may be accessed from the FDIC's Web
site at
www.fdic.gov/news/news/financial/2017/i
ndex.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/
subscriptions/fil.html.
Paper copies may be obtained through
the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington,
VA 22226 (877-275-3342 or 703-562-
2200).
Highlights:
• Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (Title XI) requires the Agencies to adopt regulations prescribing
standards for appraisals used in connection with federally related
transactions within the jurisdiction of each agency, including that they be
performed by certified or licensed appraisers. The Agencies' appraisal
regulations were last amended in 1994.
• The Agencies' appraisal regulations identify categories of real estate-
related financial transactions that do not require appraisals. In particular,
Title XI authorizes the Agencies to establish a threshold level below which
an appraisal is not required.
• Under current thresholds, all real estate-related financial transactions with a
value of $250,000 or less, as well as qualifying business loans secured by
real estate that are $1 million or less, do not require appraisals. Qualifying
business loans are business loans that are not dependent on the sale of, or
rental income derived from, real estate as the primary source of repayment.
• For real estate-related financial transactions at or below the applicable
thresholds, the interagency appraisal regulations require financial
institutions to obtain an appropriate evaluation of the real property collateral
that is consistent with safe and sound banking practices, but that does not
need to be performed by a licensed or certified appraiser or meet the other
Title XI appraisal standards.
• The Appraisal NPR creates a new definition of, and separate category for,
commercial real estate transactions and proposes to raise the threshold for
requiring an appraisal from $250,000 to $400,000 for those transactions.
• No increase in the qualifying business loan threshold is being proposed, but
the Agencies are requesting data and information about this threshold.
• No increase in the residential real estate transaction threshold is being
proposed, but the Appraisal NPR requests comment on whether other
factors should be considered in evaluating this threshold.Inactive
Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-29-2017
July 19, 2017
Appraisal Threshold for Commercial Real Estate Transactions
Summary: The FDIC, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the
Currency (the Agencies) are jointly issuing a notice of proposed rulemaking titled Real Estate Appraisals (Appraisal
NPR) that will be published in the Federal Register for a 60-day comment period. The Appraisal NPR proposes to
increase the current appraisal threshold for commercial real estate (CRE) transactions from $250,000 to $400,000. The
Appraisal NPR addresses comments received during the Economic Growth and Regulatory Paperwork Reduction Act
(EGRPRA) review process, which requires that, not less than once every ten years, the Agencies, along with the
Federal Financial Institutions Examination Council, conduct a review of the Agencies' regulations to identify outdated or
otherwise unnecessary or burdensome regulatory requirements.
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies
to all FDIC-supervised institutions.
Distribution:
FDIC-Supervised Banks (Commercial
and Savings)
Suggested Routing:
Chief Executive Officer
Chief Credit Officer
Chief Risk Officer
Related Topics:
Part 323 of the FDIC Rules and
Regulations
EGRPRA Report to Congress
Attachment:
Notice of Proposed Rulemaking for Real
Estate Appraisals
Contact:
Beverlea S. Gardner, Senior
Examination Specialist, at
Bgardner@fdic.gov or (202) 898-3640
FDIC Office of the Ombudsman, at (877)
275-3342 or ombudsman@fdic.gov
Note:
FDIC Financial Institution Letters (FILs)
may be accessed from the FDIC's Web
site at
www.fdic.gov/news/news/financial/2017/i
ndex.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/
subscriptions/fil.html.
Paper copies may be obtained through
the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington,
VA 22226 (877-275-3342 or 703-562-
2200).
Highlights:
• Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (Title XI) requires the Agencies to adopt regulations prescribing
standards for appraisals used in connection with federally related
transactions within the jurisdiction of each agency, including that they be
performed by certified or licensed appraisers. The Agencies' appraisal
regulations were last amended in 1994.
• The Agencies' appraisal regulations identify categories of real estate-
related financial transactions that do not require appraisals. In particular,
Title XI authorizes the Agencies to establish a threshold level below which
an appraisal is not required.
• Under current thresholds, all real estate-related financial transactions with a
value of $250,000 or less, as well as qualifying business loans secured by
real estate that are $1 million or less, do not require appraisals. Qualifying
business loans are business loans that are not dependent on the sale of, or
rental income derived from, real estate as the primary source of repayment.
• For real estate-related financial transactions at or below the applicable
thresholds, the interagency appraisal regulations require financial
institutions to obtain an appropriate evaluation of the real property collateral
that is consistent with safe and sound banking practices, but that does not
need to be performed by a licensed or certified appraiser or meet the other
Title XI appraisal standards.
• The Appraisal NPR creates a new definition of, and separate category for,
commercial real estate transactions and proposes to raise the threshold for
requiring an appraisal from $250,000 to $400,000 for those transactions.
• No increase in the qualifying business loan threshold is being proposed, but
the Agencies are requesting data and information about this threshold.
• No increase in the residential real estate transaction threshold is being
proposed, but the Appraisal NPR requests comment on whether other
factors should be considered in evaluating this threshold.Inactive