The Banking Regulatory Agencies’ Final Rule

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Due to strains on the U.S. economy as a result of the COVID-19 Global Pandemic, the Banking Regulatory agencies’ final rule allows regulated institutions to expeditiously extend liquidity to creditworthy households and businesses.

Under the final rule, regulated institutions may defer:

  • required appraisals and evaluations for up to 120 days for all residential and commercial real estate secured transactions,
  • excluding transactions for acquisition,
  • development, and
  • construction of real estate.

For the purposes of this rule, loans secured by real estate made to finance;

(a) land development (i.e., the process of improving land – laying sewers, water pipes, etc.) preparatory to erecting new structures,

(b) the on-site construction of industrial, commercial, residential, or farm buildings (including not only construction of new structures, but also additions or alterations to existing structures and the demolition of existing structures to make way for new structures),

(c) loans secured by vacant land, except land known to be used or useable for agricultural purposes, such as crop and livestock production,

(d) loans secured by real estate the proceeds of which are to be used to acquire and improve developed and undeveloped property, and

(e) loans made under Title I or Title X of the National Housing Act that conform to the definition of construction stated above and that are secured by real estate.

The temporary provisions will expire on December 31st, 2020, unless extended by the agencies. The temporary provisions are allowing regulated institutions to defer appraisals or evaluations. As with the interim final rule, this final rule does not revise any of the existing appraisal exceptions or any other requirements with respect to the performance of evaluations.  The agencies expect all appraisals, including deferred appraisals, to comply with USPAP, as issued by the Appraisal Standards Board of the Appraisal Foundation.

To Read the Completed Final Rule