Banks will be able to defer some appraisals for up to 120 days after a mortgage closes, according to a new rule announced by federal banking regulators.
The rule, announced by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, provides temporary relief to allow financial institutions to quickly extend financing to “creditworthy households and businesses” amid the COVID-19 outbreak.
“The agencies are deferring certain appraisals and evaluations for up to 120 dats after closing of residential or commercial real estate loan transactions,” the Fed said in a news release. “Transactions involving acquisition, development, and construction of real estate are excluded from this interim rule.”
The provisions will expire on Dec. 31 unless extended by regulators, the Fed said.
The regulators, together with the National Credit Union Administration and the Consumer Financial Protection Bureau, also issued a statement to address challenges related to appraisals and evaluations during the outbreak. The statement said that regulators would grant flexibility for appraisals of residential properties underwritten by Fannie Mae and Freddie Mac.
“For certain qualifying principal or primary residence loans, desktop appraisals and exterior-only appraisals will now be acceptable,” the statement said.
For Freddie Mac, qualifying primary residence loans are those with up to 97% loan to value. For Fannie Mae, qualifying loans are those with an LTV within the range listed on Fannie’s current eligibility matrix. Desktop and exterior-only appraisals will also be acceptable for second homes and investment properties with up to 85% LTV.