Regulators mull first appraisal threshold change in two decades

Borrowers of less than $400K wouldn't be subject to the requirement

Donald Trump and Janet Yellen (Credit: Getty Images)
Donald Trump and Janet Yellen (Credit: Getty Images)

A possible change to appraisal requirements could help small-business borrowers, but hurt appraisers.

U.S. bank regulators may increase the commercial loan threshold for requiring appraisals from $250,000 to $400,000, Bloomberg reported. The change could make it easier for small-business owners to secure financing and also ease costs since appraisal fees are typically well over $2,000.

The Independent Community Bankers of America called for an even higher threshold of $500,000 last year, saying that a change was needed “to reflect the rising costs of real estate particularly in many urban markets.” The minimum for residential real estate would remain at $250,000.

President Donald Trump met with community bankers last week to discuss possible ways to clear lending obstacles. Regulators haven’t changed the appraisal threshold in more than two decades.

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“It hasn’t been raised since 1994, so this adjustment really amounts to a correction,” Rod Alba, senior vice president for real estate finance at the American Bankers Association, told Bloomberg.

At the same time, the change could put a lot of appraisers out of work. Karen Mann, an appraiser who works in California, said appraisals are the best way to measure a property’s worth.

“There are a lot of things you don’t know by not having somebody go out and inspect the property,” she said. [Bloomberg]  Kathryn Brenzel