The NCUA Board issued a proposed rule this week that would increase the threshold below which appraisals would not be required for non-residential real estate transactions from $250,000 to $1 million. For transactions that would be exempted, federally insured credit unions would still be required to obtain a written estimate of market value of the real estate collateral that is consistent with safe and sound lending practices.

The $1 million threshold would exempt an additional 39 percent of commercial real estate transactions, while still covering almost 90 percent of the total dollar volume of such transactions.

After the meeting,¬†CUNA Chief Advocacy Officer Ryan Donovan said, “CUNA commends NCUA on its action to raise the non-residential real estate appraisals threshold, and looks forward to commenting on the proposal.”

The proposed rule would also: (a) restructure the regulation to clearly indicate when a written estimate of market value, an appraisal conducted by a state-licensed appraiser, or an appraisal conducted by a state certified appraiser is required; (b) implement a provision of S. 2155 exempting from the appraisal requirements real estate transactions where the property is located in a rural area, valued below $400,000, and no state certified or licensed appraiser is available; and (c) make conforming amendments to the definitions section. Click here for details.