(a) Appraisals required. An appraisal performed by a state-certified
or -licensed appraiser is required for any real estate-related financial
transaction except those in which—
(1) the transaction is a residential real
estate transaction that has a transaction value of $400,000 or less;
(2) a lien on real estate
has been taken as collateral in an abundance of caution;
(3) the transaction is not
secured by real estate;
(4) a lien on real estate has been taken for purposes other than
the real estate’s value;
(5) the transaction is a business loan
that—
(i) has a transaction value of $1 million
or less; and
(ii)
is not dependent on the sale of, or rental income derived from, real
estate as the primary source of repayment;
(6) a lease of real estate is
entered into, unless the lease is the economic equivalent of a purchase
or sale of the leased real estate;
(7) the transaction involves an existing
extension of credit at the lending institution, provided that—
(i) there has been no obvious and material change in market conditions
or physical aspects of the property that threatens the adequacy of
the institution’s real estate collateral protection after the
transaction, even with the advancement of new monies; or
(ii) there is no advancement
of new monies, other than funds necessary to cover reasonable closing
costs;
(8) the transaction involves the purchase, sale, investment in, exchange
of, or extension of credit secured by, a loan or interest in a loan,
pooled loans, or interests in real property, including mortgaged-backed
securities, and each loan or interest in a loan, pooled loan, or real
property interest met Board regulatory requirements for appraisals
at the time of origination;
(9) the transaction is wholly or partially
insured or guaranteed by a United States government agency or United
States government-sponsored agency;
(10) the transaction either—
(i) qualifies
for sale to a United States government agency or United States government-sponsored
agency; or
(ii) involves
a residential real estate transaction in which the appraisal conforms
to the Federal National Mortgage Association or Federal Home Loan
Mortgage Corporation appraisal standards applicable to that category
of real estate;
(11) the regulated institution is acting
in a fiduciary capacity and is not required to obtain an appraisal
under other law;
(12)
the transaction involves underwriting or dealing in mortgage-backed
securities;
(13) the
Board determines that the services of an appraiser are not necessary
in order to protect federal financial and public-policy interests
in real estate-related financial transactions or to protect the safety
and soundness of the institution;
(14) the transaction is a commercial real
estate transaction that has a transaction value of $500,000 or less;
or
(15) the transaction is exempted from the appraisal requirement pursuant
to the rural residential exemption under 12 U.S.C. 3356.
4-053.61
(b)
Evaluations required. For a transaction that does not require the services of a State
certified or licensed appraiser under paragraphs
(a)(1), (5), (7),
(14), or (15) of this section, the institution shall obtain an appropriate
evaluation of real property collateral that is consistent with safe
and sound banking practices.
*(c) Appraisals to address safety-and-soundness
concerns. The Board reserves the right to require an appraisal
under this subpart whenever the agency believes it is necessary to
address safety-and-soundness concerns.
4-053.7
(d) Transactions requiring a state-certified appraiser.
(1) All transactions
of $1,000,000 or more. All federally related transactions having
a transaction value of $1,000,000 or more shall require an appraisal
prepared by a state-certified appraiser.
(2) Commercial
real estate transactions of more than $500,000. All federally
related transactions that are commercial real estate transactions
having a transaction value of more than $500,000 shall require an
appraisal prepared by a state-certified appraiser.
4-053.8
(3) Complex appraisals
for residential real estate transactions of more than $400,000. All complex appraisals for residential real estate transactions
rendered in connection with federally related transactions shall require
a State certified appraiser if the transaction value is more than
$400,000. A regulated institution may presume that appraisals for
residential real estate transactions are not complex, unless the institution
has readily available information that a given appraisal will be complex.
The regulated institution shall be responsible for making the final
determination of whether the appraisal is complex. If during the course
of the appraisal a licensed appraiser identifies factors that would
result in the property, form of ownership, or market conditions being
considered atypical, then either:
(i) the regulated institution may ask
the licensed appraiser to complete the appraisal and have a certified
appraiser approve and co-sign the appraisal; or
(ii) the institution may engage a certified
appraiser to complete the appraisal.
(e) Transactions requiring either a state-certified
or -licensed appraiser. All appraisals for federally related
transactions not requiring the services of a state-certified appraiser
shall be prepared by either a state-certified appraiser or a state-licensed
appraiser.
(f) Deferrals of appraisals
and evaluations for certain residential and commercial transactions.
(1) 120-day grace period. The completion of
appraisals and evaluations required under paragraphs (a) and (b) of
this section may be deferred up to 120 days from the date of closing.
(2) Covered
transactions. The deferrals authorized under paragraph (f)(1)
of this section apply to all residential and commercial real estate-secured
transactions, excluding transactions for the acquisition, development,
and construction of real estate which, for purposes of this rule,
mean those loans described in paragraphs (f)(2)(i) through (iv) of
this section. The term “construction” as used in this
paragraph (f)(2) includes not only construction of new structures,
but also additions or alterations to existing structures and the demolition
of existing structures to make way for new structures. The following
loan transactions are excluded from the deferrals authorized under
paragraph (f)(1) of this section:
(i) Loans secured by real estate made
to finance:
(A) Land
development (such as the process of improving land—laying sewers,
water pipes, etc.) preparatory to erecting new structures; or
(B) The on-site construction of industrial,
commercial, residential, or farm buildings;
(ii) Loans secured by vacant land (except
land known to be used or usable for agricultural purposes);
(iii) Loans secured by real estate to
acquire and improve developed or undeveloped property; and
(iv) Loans made under Title I or Title
X of the National Housing Act that:
(A) Conform to the definition of “construction”
as defined in paragraph (f)(2) of this section; and
(B) Are secured by real estate.
(3) Sunset. The appraisal and evaluation deferrals
authorized by paragraph (f) of this section will expire for transactions
closing after December 31, 2020.
