The OCC, the Board of Governors of the Federal Reserve System (the Board), and the FDIC (collectively, the Agencies) recently issued an interim final rule (Interim Final Rule), effective immediately, to address individuals’ and businesses’ heightened need for additional liquidity as a result of the impact of COVID-19. The Interim Final Rule amends the Agencies’ regulations governing real estate appraisals for certain transactions.
Under Title XI, federally related transactions must be subject to appraisal requirements, to be determined by each Federal financial institutions regulatory agency (i.e., the OCC, the Board, the FDIC, and the National Credit Union Administration) for its respective jurisdiction. Under this authority, the Agencies generally require appraisals before the federally related transaction closes, although this is generally not required under the Uniform Standards of Professional Appraisal Practice. Further, even when federal law does not mandate an appraisal, the Agencies require evaluations for certain transactions under their safety and soundness authority.
The Interim Final Rule temporarily defers the requirement for appraisals and evaluations to allow for expeditious access to credit. Still, the Agencies have stated that they expect regulated institutions deferring appraisals or evaluations to conduct lending activity consistent with safety and soundness standards.
The deferral does not function as a waiver for the appraisal and evaluation requirements, as applicable. The regulated institutions must obtain the appraisal or evaluation, consistent with safe and sound banking practices, by the end of the deferral period.
The Interim Final Rule is effective through December 31, 2020. Comments to the Interim Final Rule must be received on or before a date 45 days after publication in the Federal Register.