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Is there an appraisal exemption for rural banks with a scarcity of appraisers?

My bank has several branches in rural counties. It has become quite a problem in some of these rural areas to find appraisers who are available to provide timely appraisals. Is there any exemption for banks that service rural areas when this scarcity of appraisers delays the loan origination?

Yes. The Economic Growth, Regulatory Relief, and Consumer Protection Act, passed in 2018, exempts rural properties from the appraisal requirement if certain conditions are met.

Notwithstanding any other provision of law, an appraisal in connection with a federally related transaction involving real property or an interest in real property is not required if it meets all of the following conditions:

  • The real property or interest in real property is located in a rural area, as defined under Regulation Z;
  • Not later than three days after the date on which the Loan Estimate form is given to the consumer, the mortgage originator or its agent, directly or indirectly:
  • Has contacted not fewer than three state certified appraisers or state licensed appraisers, as applicable, on the approved appraiser list in the market area;
  • Has documented that no state certified appraiser or state licensed appraiser, as applicable, was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments as documented by the mortgage originator or its agent;
  • The transaction is less than $400,000;
  • The mortgage originator is subject to oversight by a federal financial institution’s regulatory agency; and
  • The loan is held in portfolio, with certain limited exceptions.

Effective January 1, 2020, an evaluation will be required in lieu of an appraisal for these rural properties. (October 2019)

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