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Regulators finalize appraisal threshold for residential real estate transactions

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Regulators finalize appraisal threshold for residential real estate transactions

Federal banking regulators issued a final rule raising the appraisal exemption threshold for residential real estate transactions needing an appraisal to $400,000 from $250,000.

Instead of a full appraisal, transactions at or below the $400,000 threshold only need to obtain evaluation, which is a less detailed and cheaper process.

The final rule was issued by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp.

The OCC said about 734 of 1,211 institutions it supervises may take advantage of the regulatory relief.

The FDIC said the final rule will reduce loan valuation-related costs for small institutions it supervises by 30 minutes per transaction on average, and the Fed noted in its regulatory analysis that the savings can be passed to borrowers.

All three regulators said the final rule will not result in any long-term threats to financial stability.

The final rule will become effective on the first day after its publication in the Federal Register.