Dear Kansas Bankers,

For over 25 years, Kansas state-chartered banks and federally-chartered banks operating in Kansas have been required to obtain an appraisal on residential mortgage loans over $100,000. On October 9, 2019, the Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve issued a joint rule increasing the threshold on when an appraisal is required for a federally-chartered bank when it engages in residential real-estate mortgage loans.  Under the new rule, federally-chartered banks are not required to have an appraisal conducted by a licensed or certified appraiser unless the residential real-estate mortgage loan exceeds $400,000 provided the bank conducts an evaluation.
 
Pursuant to the powers the legislature granted to the Bank Commissioner under K.S.A. 9-1715, I have deemed it necessary to issue a Special Order to preserve the competitive equality between Kansas state-chartered banks and federally-chartered banks operating in Kansas. As of October 9, 2019, Special Order 2019-01 will permit a Kansas state-chartered bank to conduct an evaluation of residential real estate in lieu of an appraisal for loans under $400,000. Evaluations by Kansas state-chartered banks will be conducted under the same principles and requirements as residential real-estate mortgages under $100,000. Special Order 2018-01 is not affected by this new Special Order, and banks may rely upon its guidance when engaging in commercial real-estate mortgages.
 
You can view the special order on our website at the following link:
 
http://www.osbckansas.org/banking/laws/specialorders/so2019-01.pdf
 
Should you have any questions regarding this matter, please contact Tim Kemp, Deputy Bank Commissioner at 785-296-1497 or by email at tim.kemp@osbckansas.org.

 

Sincerely,
 
David L. Herndon
Acting Bank Commissioner

Copyright © 2019 Office of the State Bank Commissioner, All rights reserved.
 
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