ALEXANDRIA, Va.—In a 3-0 vote, the NCUA board has approved putting out for 45-day comment an interim final rule amending the agency’s regulations requiring appraisals of real estate for certain transactions.
The interim final rule defers the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions.
“Credit unions should continue to make best efforts to obtain a reliable valuation of real property collateral at the time of loan closing, consistent with safe and sound practices,” the NCUA said.
The interim rule is scheduled to expire on Dec. 31, 2020, but the actual deferment extends beyond that date. For instance, if a credit union closes a loan on Dec. 31, it would have until April 30, 2021 to get the appraisal.
Consistent With Other Agencies
The agency noted its interim final rule is consistent with the recent interim final rule issued by the Office of the Comptroller of the Currency, the Federal Reserve and the FDIC to defer the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions.
NCUA said the interim final rule is recommended to allow credit unions to expeditiously extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the national emergency declared in connection with COVID-19.
NCUA Chairman Rodney Hood said the interim rule will provide relief to credit union members.
‘Makes Common Sense’
NCUA Board member Todd Harper said the relief rule “makes common sense,” and added the rule is “not a waiver, it’s a deferral. It contains guardrails to ensure such estimates happen and what will happen if the estimates are not accurate. This has the potential to provide credit union members a quicker reduction in monthly payments and access to inexpensive credit.”
NCUA Board Member J. Mark McWatters also noted the rule is a deferral, not an exemption, meaning the “day of reckoning on an appraisal may come later.”
What About Drive-By Appraisals?
McWatters asked NCUA staff about whether or not a credit union can conduct a so-called drive-by or desktop appraisal and “tick the box” on meeting the requirement on getting an appraisal, or is a non-drive-by appraisal required within 120 days.
NCUA staff responded by saying the drive-by or desktop appraisal, if done by a licensed appraiser, does meet the standards.
Additional information on the NCUA rule can be found here.
NASCUS Response
In response, NASCUS CEO Lucy Ito said, "Like NCUA, state regulators are committed to providing credit unions with flexibility to serve their members during these unprecedented times. NASCUS and state regulators are closely examining the Temporary Final Rule to determine the next steps to ensure parity and uniformity between state and federally chartered credit unions.”
NAFCU Response
In response, NAFCU CEO Dan Berger said, “We thank NCUA Chairman Rodney Hood and board members Todd Harper and J. Mark McWatters for taking important steps toward ensuring credit unions can focus on serving their 120 million members as the coronavirus pandemic continues. The agency’s commitment to regulatory relief will help credit unions put needed funds in the hands of small businesses, families, and local communities by increasing flexibility for loan participations and eligible obligations. While this is a good first step, NAFCU will continue to push for additional relief for credit unions.”