Bank and Thrift Regulation: Better Guidance Is Needed for Real Estate
Evaluations (Letter Report, 05/24/94, GAO/GGD-94-144).

The de minimus appraisal threshold is the dollar level set by federal
financial regulators to exempt real estate loans made by federally
insured financial institutions from statutory appraisal requirements.
To reduce regulatory burden and foster economic growth, federal banking
and thrift regulators issued a proposed rule in June 1993 to raise the
de minimus appraisal threshold from $100,000 to $250,000 for both
residential and commercial real estate loans.  For loans of $250,000 and
below, financial institutions would be allowed to use a real estate
evaluation instead of an appraisal.  An evaluation is generally a
simpler assessment of real estate market value made by individuals who
need not be state licensed or certified.  Some Members of Congress,
consumer groups, and the appraisal industry have raised concerns that
raising the de minimus appraisal threshold could harm the safety and
soundness of financial institutions.  They have also expressed concern
about consumers' ability to be protected from and take action against
questionable evaluation practices.  This report assesses the regulatory
guidance provided to financial institutions on evaluations, examination
procedures provided to examiners on financial institutions' evaluation
practices, and federal policies to protect consumers from questionable
evaluation practices.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-144
     TITLE:  Bank and Thrift Regulation: Better Guidance Is Needed for 
             Real Estate Evaluations
      DATE:  05/24/94
   SUBJECT:  Banking regulation
             Internal controls
             Lending institutions
             Regulatory agencies
             Appraisals
             Bank examination
             Auditing procedures
             Auditing standards
             Corporate audits
             Real property

             
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