The OCC, the Board of Governors of the Federal Reserve System (the Board), and the FDIC (collectively, the Agencies) recently issued a final rule that generally tracks the Agencies’ interim final rule which, as a result of COVID-19, allowed the deferral of the requirement to obtain an appraisal or evaluation for up to 120 days after the closing of certain real estate transactions, excluding transactions for acquisition, development, and construction of real estate. WBK covered the Agencies’ interim final rule here.
The Agencies stated that the final rule will allow regulated institutions to quickly extend liquidity to creditworthy persons in light of recent strains on the U.S. economy as a result of the COVID-19 pandemic. The Agencies also noted that, in response to comments received on the interim final rule, the final rule clarifies the meaning of “transactions for acquisition, development, and construction of real estate.” Specifically, for purposes of the final rule, those transactions mean loans secured by real estate made to finance: (i) land development preparatory to erecting new structures; (ii) the on-site construction of industrial, commercial, residential, or farm buildings; (iii) loans secured by vacant land, except land known to be used or useable for agricultural purposes, such as crop and livestock production; (iv) loans secured by real estate the proceeds of which are to be used to acquire and improve developed and undeveloped property, and (v) 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 final rule is effective from the date of publication in the Federal Register through December 31, 2020.