Federal Regulatory Update

October 10, 2019

Federal agencies have revised the loan amount threshold for which appraisals are required, effective October 9, 2019.  The FHFA has issued a final rule on validation and approval of credit score models used by the GSE’s, effective October 15, 2019.




The Office of the Comptroller of the Currency (“OCC”), Board of Governors of the Federal Reserve System (“Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”) adopted a final rule to increase the threshold level at or below which appraisals are not required for residential real estate transactions from $250,000 to $400,000.  The final rule defines a residential real estate transaction as a real estate-related financial transaction that is secured by a single 1-to-4 family residential property. 


For residential real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices.


The final rule adds to the list of exempt transactions those transactions secured by residential property in rural areas that have been exempted from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act.




The Federal Housing Finance Agency (“FHFA”) has issued a final rule on the process for validation and approval of credit score models used by Fannie Mae and Freddie Mac (“GSE’s”).


The rule defines a four-phase process for a GSE to validate and approve credit score models as follows:

  1. Phase one - the Credit Score Solicitation (a solicitation by the GSE of applications from credit score model developers).
  2. Phase two - the Submission and Initial Review of Applications (an initial review by the GSE of submitted applications).
  3. Phase three - Credit Score Assessment.
  4. Phase four - Enterprise Business Assessment.


The rule establishes criteria for each of the four phases and includes required timing and notices for GSE decisions during the process.  The FHFA will review the GSE’s decision to approve or disapprove a credit score model and make the final determination.  



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Expert insights and regulatory updates on RegTech, compliance management, and fair lending.

Diane Jenkins

Director, National Mortgage Compliance Practice Group, AsurityDocs Of Counsel, Sandler Law Group

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