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 WASHINGTON, Oct. 6 /PRNewswire/ -- Regulators should press ahead with finalizing all but one of several appraisal rule modifications proposed by federal banking and lending agencies, according to the National Association of Realtors (NAR).
 The modifications, proposed by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS), call for increasing the threshold level (the level at which licensed or certified appraisers must be used for a transaction) from $100,000 to $250,000 for residential and commercial loans.
 The threshold level was established in response to the Appraisal Reform Amendments (Title 11) contained in the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) passed by Congress in 1989. FIRREA requires that all federal-related real estate transactions use a state licensed or certified real estate appraiser. FIRREA also authorized states to establish their own licensing and certification systems.
 The rule changes were proposed in response to efforts by the Clinton administration to alleviate the credit crunch for small-and medium-sized businesses.
 In recent meetings with the FDIC, NAR representatives said the association is opposed to the proposed increase in the threshold level for residential loans. NAR, which supports the other proposed rule changes, recommended to the FDIC that federal regulators adopt all but the residential change, to provide additional time for comments from the real estate, banking and appraisal industries.
 "NAR believes the issue of the proper threshold should be separated from residential and non-residential properties. By moving forward with all of the proposed changes except the threshold level for loans on residential properties, the FDIC will avoid lengthy delays in adopting its modification package for the sake of discussion over one rule change," said Edward Stachurski, 1993 chairman of NAR's Appraisal Committee.
 "While we support the government's effort to ease the credit crunch for businesses, we really believe that raising the residential property threshold to $250,000 does not encourage fairness and consumer protection the appraisal process provides home buyers and sellers," Stachurski said.
 Specifically, NAR is concerned that raising the residential threshold could lead to federal financial institutions becoming hiding places for residential real estate loans that cannot withstand a professional appraisal or conform to typical quality directed underwriting standards.
 According to Stachurski, the proposed changes to the residential threshold level also raise the question of whether such a move could provide a market advantage to federally insured financial institutions over lenders who require appraisals.
 "We believe there should not be an incentive for borrowers to forego loans purchased by the secondary market," Stachurski explained. "As such, NAR is very concerned with any regulations adopted that seem harmless on the surface, but in practice may damage the secondary mortgage market."
 NAR also believes that keeping the threshold at $100,000 for residential loans serves to further solidify Congress's intent for passing Title 11 of the FIRREA. Raising the fees on residential loans could potentially lead to a sharp reduction in the licensing fees that currently support the state appraisal commissions and boards established under Title 11.
 Raising the threshold for commercial loans would not create the same scenario, however, Stachurski said, because mortgage amounts for commercial properties are generally much higher than the proposed $250,000 threshold.
 NAR created its Appraisal Section in March 1991 to meet the specialized needs of its appraisal members. The section services more than 5,000 members. NAR recently amended its policy to permit licensed and certified appraisers to qualify for Realtor membership, and thereby become eligible to participate in a board's Multiple Listing Service. The definition of "active real estate license" for those boards requiring a real estate license to qualify for Realtor membership was expanded to also include an appraisal license/certificate.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 750,000 members involved in all aspects of the real estate industry.
 -0- 10/6/93
 /CONTACT: Annemarie Roketenetz, 202-383-7560, or Iverson Moore, 202-383-1290, both of the National Association of Realtors/

CO: National Association of Realtors ST: District of Columbia IN: CST SU: ECO

IH-DC -- DC025 -- 9398 10/06/93 14:21 EDT
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Publication:PR Newswire
Date:Oct 6, 1993

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