On April 17, 2020, the federal banking agencies published an interim final rule to allow for the deferral of certain appraisals and evaluations for up to 120 days after closing of residential or commercial real estate loan transactions. Transactions involving acquisition, development, and construction of real estate are excluded from the interim rule. The temporary provisions are set to expire Dec. 31, 2020, unless extended by the federal banking agencies.
Under the interim final rule, regulated institutions that defer receipt of an appraisal or evaluation are still expected to conduct lending activity consistent with the underwriting principles in the agencies' Standards for Safety and Soundness and Real Estate Lending Standards that focus on the ability of a borrower to repay a loan and other relevant laws and regulations.
By the end of the deferral period, regulated institutions must obtain appraisals or evaluations that are consistent with safe and sound banking practices, as required by the agencies' appraisal regulations.
WBA has prepared a policy for use by financial institutions to aid them in complying with the requirements of federal regulators to still conduct lending activity consistent with the agencies' underwriting principles despite deferral of receipt of an appraisal or evaluation. The policy is designed to be used as part of your institution's broader Standards for Safety and Soundness, Real Estate Lending Standards, or Appraisal policy. The policy also contains numerous resources, including investors' temporary appraisal guidelines and requirements.