Jeff Dickstein, Pro Teck’s Chief Compliance Officer, is responsible for Pro Teck’s adherence to all state, federal and industry regulations. With Notes from the Regulatory Road, Jeff provides timely commentary on what is happening in the industry.
The month of March brought the release of the Economic Growth and Regulatory Paperwork Reduction Act — a joint agency report to Congress that reviews regulations over the last decade and considers whether any of those regulations are outdated, unnecessary or unduly burdensome.
The report is required under Section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). It involves the following agencies:
• Federal Financial Institutions Examination Council (FFIEC)
• Board of Governors of the Federal Reserve System
• Office of the Comptroller of the Currency (OCC)
• Federal Deposit Insurance Corporation (FDIC)
The 440-page report was released in mid-March and has taken some time to review. A first read shows there are a few appraisal related items, as well as comments on AMCs, to keep track of. So far, all of it appears positive. Here’s a breakdown of what we’ve observed so far:
Raising appraisal threshold for commercial real estate loans
The agencies are developing a proposal to increase the threshold for requiring an appraisal on commercial real estate loans from $250,000 to $400,000, in order to reduce regulatory burden in a manner consistent with safety and soundness.
Addressing appraiser shortages in rural areas
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) allows the Appraisal Subcommittee of the FFIEC (ASC), after making certain findings and with the approval of the FFIEC, to grant temporary waivers of any requirement relating to certification or licensing of a person to perform appraisals under Title XI.
Furthermore, state appraiser certifying or licensing agencies may recognize, on a temporary basis, the certification or license of an appraiser issued by another state. The agencies intend to issue a statement to regulated entities informing them of the availability of both temporary waivers and temporary practice permits, which are applicable to both commercial and residential appraisals, and may address temporary appraiser shortages. Additionally, the agencies will work with the ASC to streamline the process for the evaluation of temporary waiver requests.
Clarified use of evaluations versus appraisals
To clarify current supervisory expectations regarding evaluations, particularly in response to commenters in rural areas, in March 2016 the agencies issued an interagency advisory on when evaluations can be performed in lieu of appraisals, including when transactions fall below the dollar thresholds set forth in the appraisal regulations.
As always, I will keep you apprised of all developments in the months to come.
Jeff Dickstein, Pro Teck’s Chief Compliance Officer, is responsible for Pro Teck’s adherence to all state, federal and industry regulations. He’s active with a number of industry boards and is currently Chairman of The Appraisal Foundation’s Industry Advisory Council.
Jeff has been in the mortgage industry for 35 years, with more than 25 years of experience as an appraiser (he is a Certified Residential Appraiser in 15 states). With Notes from the Regulatory Road, Jeff will provide timely commentary on what is happening in the industry.