Overview
Title
Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB
Agencies
ELI5 AI
The Federal Reserve is changing some rules to make sure banks keep track of how they decide the value of homes and buildings, and they will be sticking to these rules for three more years to make them fair for everyone. Even though they asked people for ideas or concerns, nobody sent any comments.
Summary AI
The Board of Governors of the Federal Reserve System is extending, with revisions, the rules for recordkeeping and disclosure related to real estate appraisal standards, known as FR Y-30. This extension is set for three years and takes effect immediately. These rules are mandatory for state member banks and nonbank subsidiaries of bank holding companies, aiming to ensure compliance with uniform appraisal standards as required by law. No public comments were received during the notice period despite an invitation for input.
Abstract
The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, with revision, the Recordkeeping and Disclosure Provisions Associated with Real Estate Appraisal Standards (FR Y-30; OMB No. 7100-0250). The revisions are effective immediately.
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Sources
AnalysisAI
The document from the Federal Register, published by the Board of Governors of the Federal Reserve System (the Board), outlines the extension and revision of rules associated with real estate appraisal standards, known as FR Y-30. This regulation is important because it governs how financial institutions must keep records and disclose information regarding real estate appraisals. These rules are particularly relevant to state member banks and nonbank subsidiaries of bank holding companies.
General Summary
The Board has decided to revise and extend for three more years the real estate appraisal standards covered by FR Y-30. This move is intended to ensure ongoing compliance with uniform appraisal standards as required by Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The revisions are effective immediately and were adopted despite receiving no public comments during the designated comment period.
Significant Issues or Concerns
Several issues arise from this document, particularly concerning transparency and clarity:
Cost Implications: The document does not detail any cost implications or budgetary effects of extending these regulatory provisions for an additional three years. This omission can lead to uncertainty about the financial impact on the involved institutions.
Historical Oversight and Current Revisions: It is noted that previous collections under a related regulation, FR H-4, were not formally approved. The current revisions are addressing these past oversights, yet the document provides no detailed explanation for how this issue is being rectified.
Legal Terminology: The text employs legal and technical jargon without sufficient explanations geared towards non-experts, potentially causing confusion among general readers.
Mandatory vs. Voluntary Requirements: While the obligation to follow FR Y-30 is described as mandatory, some recordkeeping provisions are labeled voluntary. This could create confusion over compliance expectations.
Impact on the Public
Broadly, the extension of the appraisal standards intends to promote accountability and protection in real estate-related financial transactions, which can benefit consumers by encouraging fair and consistent valuation practices.
Impact on Specific Stakeholders
Financial Institutions: State member banks and nonbank subsidiaries of bank holding companies are directly affected. They are required to comply with these regulatory standards, necessitating systems and processes to meet the recordkeeping and disclosure obligations. While the specified burden hours are relatively low, variations between different types of institutions warrant further clarification.
Regulatory Oversight Bodies: The revisions imply a need for heightened diligence from regulators to ensure the uniform application of these real estate appraisal standards. The lack of public commentary might suggest either wide acceptance or insufficient awareness of the changes among the affected entities.
In summary, while the document represents a regulatory necessity in maintaining integrity in real estate appraisals, there is a need for greater transparency regarding its financial implications, clearer communication to ensure non-expert understanding, and better engagement during public commentary phases to gather diverse insights and concerns.
Issues
• The document does not specify the cost implications or budgetary impact of extending the Recordkeeping and Disclosure Provisions for three years.
• No detailed explanation is provided for why previous collections under FR H-4 were not formally cleared or how the revision addresses this oversight.
• The legal authorizations mention that the recordkeeping provisions in the Guidelines are voluntary, yet the overall obligation to respond to FR Y-30 is mandatory, which could be seen as contradictory or confusing.
• The document uses legal and technical terminology without lay explanations, which might make it difficult for a non-expert audience to understand.
• The estimated annual burden hours differ significantly for recordkeeping and disclosure between SMBs and nonbank subsidiaries of BHCs, but the reasons for these differences are not explained.
• There is a lack of clarity on how SMBs and nonbank subsidiaries are expected to manage the burden and compliance effectively.
• The notice did not receive any comments during the public comment period, which could indicate inadequate dissemination or engagement with possibly affected or interested parties.