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Federal banking agencies issue final rule involving commercial real estate

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a final rule that increases the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $500,000.

The federal government made the annoucement on Monday, April 2.

The agencies originally proposed to raise the threshold, which has been in place since 1994, to $400,000. But officials determined that a $500,000 threshold will materially reduce regulatory burden and the number of transactions that require an appraisal.

The final rule allows a financial institution to use an evaluation rather than an appraisal for commercial real estate transactions exempted by the $500,000 threshold.

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