Last week ended with some good news that can affect many Lewes, DE real estate transactions—specifically some with bottom lines equal to $400,000 or less. It came in the form of a rule change from Washington’s rule-makers, and whether or not it applies to your own property, it may signal a shift in regulatory outlook.
Many Lewes, DE real estate transactions are subject to Federal regulations—rules devised to ensure the soundness of the financial institutions that provide home loans. Theoretically, everyone who buys or sells Lewes, DE real estate should benefit from legal regulations that restrain lenders from granting loans too easily. When that takes place, widespread “easy money” usually results in the kind of abrupt return to reality we saw in the last decade. Nobody wants that!
One way regulators prevent residential real estate “bubbles” is by seeing that home loans are legitimately collateralized—that home loan amounts don’t exceed the real value of the underlying properties. That’s realized by requiring that strictly professional appraisals be performed. Appraisals demonstrate that homes true values equal or exceed proposed loan amounts.
But—it’s always a balancing act. Appraisals take time and cost money—making buying and selling that much more cumbersome. Any regulation that is too strict unnecessarily retards legitimate Lewes, DE real estate transactions. Over time, that’s what had happened with the appraisal requirement.
Last Friday an official press release announced a lightening of the appraisal requirement. The Federal Reserve, FDIC, and Office of the Comptroller of the Currency “have adopted a final rule that increases the threshold for residential real estate transactions…from $250,000 to $400,000.”
The rule change was made after consultation with various consumer protection entities to ensure that upping the threshold for appraisals wouldn’t be overly liberal. Since 25 years have passed since the last adjustment, inflation alone probably validated the decision.