The National Credit Union Administration (NCUA) recently issued an interim final rule in response to COVID-19 with an effective date of April 21, 2020. NCUA has adjusted real estate appraisal regulations so credit unions can provide liquidity to creditworthy consumers without delay. The interim final rule was issued due to the economic climate created by COVID-19.
Every federally related transaction must have a Title XI appraisal. Appraisals are generally completed between a borrower and lender prior to the close of the transaction. NCUA has authority to decide whether there are certain transactions that do not need to have a Title XI appraisal. The interim final rule extends the requirement to acquire an appraisal or written estimate of market value for up to 120 days after closing. Credit unions which do defer the requirement are expected to operate within the safe and sound underwriting principles. Credit unions are also expected to implement risk mitigation strategies in case deferred appraisals indicate that the market value is below the expected value for certain transactions. The rule applies to some residential and commercial real estate transactions. Notable exclusions include transactions for the “acquisition, development, and construction” of real estate. The interim rule is effective until December 31, 2020.
The interim rule is essentially identical to the final interim rule that was issued by the OCC, Board of Governors of the Federal Reserve System (FRB), and FDIC on April 14, 2020, which was previously covered by WBK.