The American Bankers Association and two associations today offered federal regulators several recommendations to improve the integrity of residential property valuations, as recently directed by President Trump.
The March 13 executive order “Promoting Access to Mortgage Credit” instructed federal banking agencies to improve mortgage availability and affordability, including through modernizing appraisal regulations. In a letter to the agencies, ABA, the Housing Policy Council and the Independent Community Bankers of America made the following recommendations:
- Increase the appraisal exemption threshold for one-to-four family residential properties from $400,000 to $625,000, and index the threshold annually.
- Align the interagency appraisal guidelines with 2026 model risk management guidance and its risk-based approach to the use of models. Also, the agencies should permit institutions in federally related transactions to use automated tools for primary collateral review without requiring prior approval from their primary federal regulator.
- Regulators should permit the use of a continuum of valuation methodologies that vary based on the risk profile of the transaction, according to clear and consistently applied standards and appropriate oversight.
- Adjust the $1 million loan amount limit for a federally related transaction, or define factors that could help identify complex transactions, as the current limit is no longer appropriate.
“Our organizations believe that the prudential banking regulators have a critical role to play in establishing standards that modernize the valuation process across the entire housing finance ecosystem,” they said.
