New federal rule defers appraisal requirement for up to 120 days

Federal regulators this week adopted an interim final rule deferring the requirement for banks to get appraisals on properties until up to 120 days after a mortgage is closed. The change was announced by the Treasury Department’s Office of the Comptroller of the Currency (OCC), the Federal Reserve’s Board of Governors and the Federal Deposit Insurance Corporation (FDIC). As such, the new rule, which is effective until Dec. 31, only applies to banks regulated by the three agencies.

The deferrals may apply to both residential and commercial transactions that involve existing properties, with the agencies’ announcement noting heightened risks in financing the acquisition, development and construction of real estate. And mortgages deferring appraisals under the new rule must be kept by the banks themselves; loans backed by or sold to government-sponsored enterprises like Fannie Mae and Freddie Mac, or government agencies like the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), will continue to require pre-closing appraisals.

Read the full article Scotsman Guide here.