We hope you are having a great start to December and the holiday season.

We know it is the end of the year and you are busy. December usually represents a great time to take some off of next year’s plate. Are there audits coming that you need to get buttoned down? Is it time for an external loan review? Let us know. We’d love to help.

If you need help understanding how any of these news items could affect your bank, please don’t hesitate to reach out to us at (918) 791-0699 or by emailing us at info@communitybankadvisors.com.


FDIC Seeks to Increase Appraisal Exemption Level to $400K (source)

  • The FDIC issued a notice of proposed rule-making that would increase the threshold for residential real estate transactions requiring an appraisal to $400,000. The current threshold of $250,000 has been in place since 1994.
  • In issuing the notice, the FDIC cited “concerns raised about the time and cost associated with completing residential real estate transactions.”
  • The FDIC added that exempted residential real estate transactions be required to “obtain an evaluation consistent with safe and sound banking practices,” adding that evaluations were traditionally less detailed and less expensive than appraisals.
  • The FDIC also proposed incorporating the rural residential appraisal exemption in the Economic Growth, Regulatory Relief and Consumer Protection Act signed into last on May 24th to the list of exempt transactions and require evaluations for these exempt transactions.


Appraisers accuse federal regulators of recreating housing crisis conditions (source)

  • According to FDIC data, increasing the appraisal threshold would have exempted an additional 214,000 mortgages from agencies’ appraisal requirement in 2017.
  • According to Appraisal Institute President James Murrett, the newly proposed rules would add significantly more danger to the lending environment and harken back to the way things were just before the financial crisis.
  • Murrett said that increasing the appraisal threshold will “threaten the vital role” that appraisers have in real estate deals. “Raising the threshold means more evaluations will be allowed in place of appraisals. The Appraisal Institute anticipates that will result in a return to the loan production-driven environment seen during the lead-up to the financial crisis, where appraisal and risk management were thrust aside to make more – not better – loans,” Murrett continued. “Apparently, the FDIC has learned nothing from that experience.”


Fed Chairman Powell now sees current interest rate level “just below” neutral (source)

  • Federal Reserve Chairman Jerome Powell said Wednesday, Nov. 28th, that he considers the central bank’s benchmark interest rate to be near a neutral level, an important distinction from remarks he made less than two months ago.
  • “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth,” Powell told The Economic Club of New York in a speech being closely watched in what has become a volatile financial marketplace.
  • The chairman’s observation on rates in early October helped set off a rough period on Wall Street, after he said the Fed was “a long way” from neutral.
  • Major averages dipped briefly into a 10% correction and worries grew that more rate hikes might meaningfully slow down the strong economic growth of the past two years.
  • “While FOMC participants’ projections are based on our best assessments of the outlook, there is no preset policy path,” he said. “We will be paying very close attention to what incoming economic and financial data are telling us. As always, our decisions on monetary policy will be designed to keep the economy on track in light of the changing outlook for jobs and inflation.”
  • Powell also noted that there is a lad for how long it takes for rates to have an impact – a “year or more” in his estimation, an important point that goes to his stress on the importance of getting ahead of an overheating economy.