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Issue

Appraisal Availability

Alleviating the Shortage of Appraisers

ABA Position

Banks are currently facing unique challenges in light of appraiser shortages in many regions of the country, but more specifically in small urban and rural areas for real estate transactions. Our members report there is a limited number of qualified appraisers willing to accept assignments in many of their markets – even when the bank is willing to pay a premium for the assignment. This shortage negatively impacts borrowers as it extends turnaround times, extends rate locks and delays closings. In certain cases, members report that they are unable to finance loans and compete in more rural markets.

ABA believes that there are multiple issues affecting appraisal availability. Urgent measures are needed now to allow banks to process existing financing needs, while long-term changes will be required to address more fundamental problems. We encourage workable solutions that ensure the continued safety and soundness of the banking industry, including:

  • Raising the threshold level for commercial real estate transactions from $250,000 to $500,000, in order to relieve appraiser shortage pressures in rural and other areas.
  • Reviewing the appraisal threshold for residential real estate transactions.
  • Easing qualification criteria for real property appraisers, as adopted by the Appraisal Qualification Board in May 2018. Changes include removal of the required bachelor’s degree for Licensed Residential appraisers, and decreasing time frames for experience and education hour requirements.
  • The S. 2155 legislation exempts federal institutions from appraisals on some rural area real estate loans of $400,000 and under, when loans meet some specific criteria. This will relieve transaction from excess delay times and appraiser shortages impacting more rural areas where appraisals are not available.

The ABA Appraisal Working Group discusses appraisal issues and the impact on lending at the bank level. To join the Appraisal Working Group, please contact Sharon Whitaker.

ABA believes that there are multiple issues affecting appraisal availability. Urgent measures are needed now to allow banks to process existing financing needs, while long-term changes will be required to address more fundamental problems. We encourage workable solutions that ensure the continued safety and soundness of the banking industry, including:

  • Raising the threshold level for commercial real estate transactions from $250,000 to $500,000, in order to relieve appraiser shortage pressures in rural and other areas.
  • Reviewing the appraisal threshold for residential real estate transactions.
  • Easing qualification criteria for real property appraisers, as adopted by the Appraisal Qualification Board in May 2018. Changes include removal of the required bachelor’s degree for Licensed Residential appraisers, and decreasing time frames for experience and education hour requirements.
  • The S. 2155 legislation exempts federal institutions from appraisals on some rural area real estate loans of $400,000 and under, when loans meet some specific criteria. This will relieve transaction from excess delay times and appraiser shortages impacting more rural areas where appraisals are not available.

The ABA Appraisal Working Group discusses appraisal issues and the impact on lending at the bank level. To join the Appraisal Working Group, please contact Sharon Whitaker.

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Sharon L. Whitaker

VP, Commercial Real Estate & Finance, Housing Policy, Mortgage Finance & Regulation

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