After coming under pressure from Congress and the appraisal industry, federal banking industry regulators are backing down from a controversial rule that would have waived mandatory appraisals on real estate transactions of $100,000 or less.

Five of six financial agency regulators agreed to a compromise rule that would exempt from the appraisal requirement only those real estate deals financed with mortgages of $50,000 or less.

The last holdout, the Federal Reserve Board, which regulates bank holding companies and the mortgage banking subsidiaries of banks, is expected soon to follow suit, much to the consternation of the banking industry. Many bankers believe the mandatory use of licensed appraisers will make routine real estate transactions more costly.

The controversy began in June when the Fed issued final regulations implementing appraisal reforms that were called for in last year's savings and loan cleanup legislation. The move caught many by surprise because the agency had indicated in February it was considering a much lower $15,000-or-less appraisal exemption.

Only one other bank regulator officially recognized the $100,000 cutoff, but the rest were expected to go along because of an agreement among the agencies to arrive at uniform appraisal standard rules.

That same uniformity pledge now is working in reverse, and the Fed is expected to fall in line with the other regulators. In the past two weeks, those regulators have decided to require appraisals on transactions that start at $50,000.

"It has always been the intention of the agencies from the very beginning that our real estate appraisal regulations would be the same," said Roger Pugh, manager for policy development at the Fed. "Since the others have come out with $50,000, I would think that the {Fed's Board of Governors} will reconsider."

Regulators apparently began analyzing their more generous appraisal waiver decision at the insistence of Rep. Doug Barnard Jr. (D-Ga.), the author of the federal appraisal reform legislation, contained in the S&L cleanup legislation. Barnard, critical of the $100,000-or-less waiver, threatened to call the agency directors to publicly account for the "advisability" of the more generous exemption, but canceled an Aug. 1 hearing on the matter after receiving assurances that concessions would be made.

During the past few months, the appraisal industry also mounted a campaign to lower the cutoff level and further tighten published appraisal standards. The industry's two main trade groups, the American Institute of Real Estate Appraisers and the Society of Real Estate Appraisers, filed a petition with the Fed asking it to reconsider the matter. Individual appraisers also flooded regulators with letters objecting to the rules.

The two appraisal groups also were ready to take the matter to court as a last resort, said Donald E. Kelly, a spokesman for the Society of Real Estate Appraisers.

Apparently, the lawsuit threat made an impression. Mary C. Short, an official with the Office of Thrift Supervision, which oversees the cleanup of the S&L industry, reported that her agency's attorneys concluded there were some grounds for legal action because the jump to a $100,000 threshold from $15,000 was a "significant enough change" that the agency should have sought further public input on the matter.

Barnard said he can live with the $50,000 figure, although he would have preferred returning to the $15,000 exemption.

Mortgage Guarantee Insurance Corp., one of the nation's leading mortgage insurers, would rather see a lower cutoff of about $30,000, said Timothy Leberman, manager of the firm's appraisal operations. The $30,000-plus range is "more representative of the type of properties" where appraisal problems tend to show up, he said.

Leberman does, however, consider the lower $50,000 threshold an improvement, albeit one that falls on the "high end of acceptability."

Too many appraisers, Leberman said, could use the $100,000 limit to escape new federal licensing regulations that take effect next summer by working the lower end of the market. A $50,000 threshold, though, means that most appraisers working for lenders will have to comply with federal standards, Leberman said.

That, in turn, will open the way to discipline of appraisers performing shoddy work, he added. "Today there is not really a lot you can do about a bad appraiser," Leberman said.

The American Bankers Association, a trade group representing commercial banks, objects to the lower threshold.

In a statement, the association's executive vice president, Donald G. Ogilvie, called the move an "over-reaction" that will penalize lenders who did not engage in the abusive lending practices the rule is designed to end.

As a consequence, Ogilvie said, the cost of appraisals will increase.

Stephen Dreisler, chief lobbyist for the National Association of Realtors, dismissed the lower threshold as "much ado about nothing." Lenders, he said, still are going to insist that appraisals accompany mortgage transactions of less than $50,000, regardless of what the federal regulators require.

The new rule announcements also contain a change redefining who is eligible to perform mandatory appraisals.

Until recently, the agencies were planning to allow anyone who meets one of the 50 state definitions of a licensed appraiser to perform compulsory appraisals.

Now, however, regulators want licensed appraisers to meet federal standards for what was once called "residential certified appraisers." Those rules call for 75 hours of approved classes, two years experience and testing.

As a result, "we are not going to be talking about somebody who just walks in off the street," Barnard said.

Ritch LeGrand, president of the Society of Real Estate Appraisers, said that he welcomes these modifications, but that his members are inclined to push for more changes designed to rectify appraiser qualification mismatches.

For instance, the stricter definition of licensed appraiser "illogically" prohibits those professionals from working on residential deals that exceed $1 million, Kelly said. That leaves commercial real estate appraisers to do the work, although their commercial experience does not qualify them to do so, he said.

A. Scruggs Love Jr., president of the American Institute of Real Estate Appraisers, said his members hope to change a provision that still allows licensed residential appraisers to evaluate commercial transactions of less than $250,000.