Banking Agencies to Increase Commercial Real Estate Appraisal Threshold

The Office of the Comptroller of the Currency, the FDIC and the Board of Governors of the Federal Reserve System (collectively, the "Agencies") adopted a new rule that will increase the threshold for commercial real estate transactions. The new rule will raise the threshold for an appraisal on properties from $250,000 to $500,000.

In accordance with the rule, the Agencies will no longer require appraisals for commercial real estate transactions below the $500,000 threshold. Instead, such transactions will be subject to an evaluation, which is not required to comply with Uniform Standards of Professional Appraiser Practices in order to provide a market value estimate of the real estate pledged as collateral. The rule stipulates that applicable transactions include all real estate-related financial transactions, except for those that are secured by a single one-to-four-family residential property.

The final rule will become effective upon its publication in the Federal Register.