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Federal Reserve, FDIC, OCC Issue Interim Final Rule Allowing for 120-Day Deferral in Obtaining Appraisals, Evaluations in Connection with Real Estate Related Financial Transactions

by Todd Paradis | Apr 15, 2020
 
On April 14, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) announced their issuance of an Interim Final Rule allowing for their regulated institutions to defer obtaining an appraisal or evaluation in connection with a real estate related financial transaction (as defined in Title XI of FIRREA) for up to 120 days after a transaction closes.

Appraisals or evaluations performed under this deferral option would still be based around the original closing date, and not the subsequent date on which the appraisal or evaluation is actually performed. The agencies also expect regulated entities to implement risk mitigation policies in the event that a deferred appraisal or evaluation shows the value of the collateral to be less than entity’s “prudent underwriting estimation of the collateral value”.

The Interim Final Rule will take effect upon its publication in the Federal Register, and apply to all lending activities defined as a “federally-related transaction” by the bank regulatory agencies. To read the full text of the Interim Final Rule, click here.