On April 14th, three federal financial institution regulatory agencies issued a rule change that will allow appraisals on properties to be deferred for up to 120 days during the COVID-19 national emergency.
The FRB, FDIC, and OCC issued the rule change, which will be in effect until December 31, 2020 unless extended.
It is important to note that this rule change only applies to mortgages originated and held in portfolio by a financial institution regulated by the FRB, FDIC, or OCC. It does not apply to loans sold on the secondary mortgage market to Fannie Mae or Freddie Mac, loans that are guaranteed by VA or USDA, or loans that are insured by HUD/FHA.
The rule allows regulated lending institutions to postpone (not waive) appraisals for loans, due to the difficulty of obtaining appraisals as a result of “stay at home” or “shelter in place” orders issued by various states. A regulated institution may originate and close on a mortgage loan without an appraisal but must subsequently obtain an appraisal within 120 days of loan closing. This rule applies to both residential and non-residential mortgage loans, but it specifically excludes “transactions for acquisition, development, and construction of real estate.” It is intended to make it easier for property owners to access their equity during this national emergency.
The agencies are also allowing exterior-only inspection appraisals and desktop appraisals in certain situations.
The rule will become effective when it is published in the Federal Register, likely within the next several days. The text of the interim final rule can be accessed here.
On another note, Fannie Mae has updated Lender Letter LL-2020-04 and its COVID-19 FAQs, effective April 14, 2020. A link to this updated guidance may be found here.
For more info regarding Coronavirus and appraisers, visit the Appraisal News section of our blog.
Written by Dan Bradley. Daniel A. Bradley, SRA, CDEI is the Director of Online Appraisal Curriculum for McKissock Learning. He has been a practicing real property appraiser since 1987, and has been instructing and authoring appraisal courses since 1992. He is a state certified general appraiser in Pennsylvania and is currently on the FHA appraiser roster. From 2004 to 2013, Dan was a member of the Pennsylvania State Board of Certified Real Estate Appraisers, serving for five years as vice-chairman and three years as chairman. He has also has served as a contracted expert witness appraisal reviewer for the Pennsylvania Department of State.
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