A move by the National Credit Union Administration to quadruple the appraisal threshold for nonresidential real estate loans could have broad-reaching consequences for the financial system, according to an op-ed by Appraisal Institute President Stephen Wagner published in American Banker last week. The op-ed came ahead of NCUA’s May 23 meeting, where the board is expected to consider the proposal increasing the threshold from $250,000 to $1 million.
Should the proposal be approved, two-thirds of commercial loans by credit unions would be exempt from the appraisal requirement, Wagner noted. He added that such an increase would put pressure on other financial regulatory agencies to reconsider their thresholds. “At that point, the NCUA—the agency with the least direct experience in overseeing business and commercial real estate lending—effectively would be driving the appraisal policies for the financial regulatory system.”
The American Bankers Association has long raised concerns about NCUA’s proposal, highlighting that it would create an unlevel playing field between credit unions and banks, which are currently subject to an appraisal threshold of $500,000 for nonresidential real estate transactions.
