New Federal rule on home appraisals

newappraisalNew Federal rule on home appraisals officially started Oct 9th. The final rule increases the threshold level at or below which appraisals are not required for some residential real estate transactions from $250,000 to $400,000.

This is the first time in 25 years that federal regulators have increased the property value limit of the homes that require an appraisal as part of the selling process.

Now, it’s important to note that the new rules do not apply to loans wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government-sponsored agency.

That means that loans sold to or guaranteed by the FHA, HUD, VA, Fannie Mae, or Freddie Mac would still require an appraisal, per each agency’s rules.

The new rule still “requires institutions to obtain an evaluation to provide an estimate of the market value of real estate collateral.”  This can be done via an appraisal or possibly a Broker Price Opinion (BPO).

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