Summary: 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.
