NACUSO Advisory Group Urges Caution Around NCUA’s New Appraisal Rule

NEWPORT BEACH, Calif.–NACUSO’s Business Services Advisory Group is advising credit unions to practice “careful restraint” following NCUA’s new appraisal rule.

Home Appraisals

There is a lot of appreciation for the flexibility that the new rule provides, and the confidence that is being placed on credit unions by the NCUA,” said Bill Beardsley, CEO of Michigan Business Connection and chair of the Advisory Group. “Our group consists of very experienced commercial lending professionals who have seen the ups and downs of many economic cycles.  As a result, the consensus of our group is to recommend careful restraint in applying the full extent of new rule.”

As CUToday.info reported earlier, the new appraisal rule is set to go into effect on Oct. 22 and increases to $1 million from $250,000 the threshold above which appraisals are required for commercial real estate transactions.  Instead of requiring an appraisal, the rule allows reliance on a less formal valuation or “written estimate of market value.”

Formal Appraisals Still Favored

“We believe that there are a lot of circumstances where a formal appraisal is still the most prudent valuation, and encourage credit unions to author policies that, while permitting the use of written estimates,  do so as a function of credit strength and the risk of the transaction,” Beardsley said.

In its statement, the Advisory Group said most of the CUSO members seem to be continuing to recommend formal appraisals for loans less than $1 million.

“Our commercial lending members put safety and soundness and regulatory compliance at the forefront of serving credit unions and their members,” said Jack Antonini, CEO of NACUSO. “Our Advisory Groups are very helpful to NACUSO to stay connected with current opportunities and concerns, and provide a forum for idea and best practice exchange between members.” 

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