Real Estate Appraisals, 65666-65672 [2020-21563]

Download as PDF 65666 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations same email address or call the telephone number in appendix A to 10 CFR part 73. For questions or concerns on submitting these advance notifications to the NRC, please contact the Office of International Programs at 301–287– 9056. * * * * * PART 140—FINANCIAL PROTECTION REQUIREMENTS AND INDEMNITY AGREEMENTS 82. The authority citation for part 140 continues to read as follows: ■ Authority: Atomic Energy Act of 1954, secs. 161, 170, 223, 234 (42 U.S.C. 2201, 2210, 2273, 2282); Energy Reorganization Act of 1974, secs. 201, 202 (42 U.S.C. 5841, 5842); 44 U.S.C. 3504 note. § 140.9a [Amended] 83. In § 140.9a(b), add ‘‘140.8,’’ in numerical order. ■ Dated: September 21, 2020. For the Nuclear Regulatory Commission. Cindy K. Bladey, Chief, Regulatory Analysis and Rulemaking Support Branch, Division of Rulemaking, Environmental, and Financial Support, Office of Nuclear Material Safety and Safeguards. [FR Doc. 2020–21148 Filed 10–15–20; 8:45 am] BILLING CODE 7590–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC–2020–0014] RIN 1557–AE86 FEDERAL RESERVE SYSTEM 12 CFR Part 225 [Docket No. R–1713] RIN 7100–AF87 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 323 RIN 3064–AF48 Real Estate Appraisals The Office of the Comptroller of the Currency, Treasury (OCC); the Board of Governors of the Federal Reserve System (Board); and the Federal Deposit Insurance Corporation (FDIC). ACTION: Final rule. jbell on DSKJLSW7X2PROD with RULES AGENCY: The OCC, Board, and FDIC (collectively, the agencies) are adopting SUMMARY: VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 as final the interim final rule published by the agencies on April 17, 2020, making temporary amendments to the agencies’ regulations requiring appraisals for certain real estate-related transactions. The final rule adopts the deferral of the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate. Regulated institutions should make best efforts to obtain a credible estimate of the value of real property collateral before closing the loan and otherwise underwrite loans consistent with the principles in the agencies’ Standards for Safety and Soundness and Real Estate Lending Standards. The agencies’ final rule allows regulated institutions to expeditiously extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the coronavirus disease 2019 (COVID event). The final rule adopts the interim final rule with one revision in response to comments received by the agencies on the interim final rule. DATES: The final rule is effective October 16, 2020 through December 31, 2020. FOR FURTHER INFORMATION CONTACT: OCC: G. Kevin Lawton, Appraiser (Real Estate Specialist), (202) 649–6670; Mitchell Plave, Special Counsel, (202) 649–5490; or Joanne Phillips, Counsel, Chief Counsel’s Office (202) 649–5500; Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. For persons who are deaf or hearing impaired, TTY users may contact (202) 649–5597. Board: Anna Lee Hewko, Associate Director, (202) 530–6260; Teresa A. Scott, Manager, Policy Development Section, (202) 973–6114; Carmen Holly, Lead Financial Institution Policy Analyst, (202) 973–6122; Devyn Jeffereis, Senior Financial Institution Policy Analyst, (202) 365–2467, Division of Supervision and Regulation; Laurie Schaffer, Deputy General Counsel, (202) 452–2272; Derald Seid, Senior Counsel, (202) 452–2246; Trevor Feigleson, Counsel, (202) 452–3274; David Imhoff, Attorney, (202) 452–2249, Legal Division, Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. For the hearing impaired only, Telecommunications Device for the Deaf (TDD) users may contact (202) 263– 4869. FDIC: Beverlea S. Gardner, Senior Examination Specialist, Division of Risk PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 Management and Supervision, (202) 898–3640, BGardner@FDIC.gov; Mark Mellon, Counsel, Legal Division, (202) 898–3884; or, Lauren Whitaker, Senior Attorney, Legal Division, (202) 898– 3872, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For the hearing impaired only, TDD users may contact (202) 925–4618. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Background III. Overview of the Interim Final Rule and Comments A. Overview of the Interim Final Rule B. Public Comments IV. Summary of the Final Rule V. Administrative Law Matters A. Administrative Procedure Act B. Congressional Review Act C. Paperwork Reduction Act D. Regulatory Flexibility Act E. Riegle Community Development and Regulatory Improvement Act of 1994 F. Use of Plain Language G. OCC Unfunded Mandates Reform Act of 1995 Determination I. Introduction Impact of the COVID event on appraisals and evaluations. Due to the impact of the COVID event 1 and the need for businesses and individuals to quickly access additional liquidity, the agencies published an interim final rule in the Federal Register on April 17, 2020 (interim final rule),2 that deferred 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, excluding transactions for acquisition, development, and construction of real estate. The interim final rule allows businesses and individuals to quickly access liquidity from real estate equity during the COVID event. The agencies are adopting the interim final rule as final, with one revision in response to comments. The amendments to the agencies’ appraisal regulations allow for the deferral of appraisals and evaluations for qualifying transactions through December 31, 2020, as detailed further below. II. Background Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI) 3 directs each Federal 1 The coronavirus disease 2019 outbreak was declared a national emergency under Proclamation No. 9994, 85 FR 15337 (Mar. 18, 2020). 2 85 FR 21312. 3 12 U.S.C. 3331 et seq.; Public Law 101–73, 103 Stat. 183 (1989). E:\FR\FM\16OCR1.SGM 16OCR1 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES financial institutions regulatory agency to publish appraisal regulations for federally related transactions within its jurisdiction.4 The purpose of Title XI is to protect federal financial and public policy interests 5 in real estate-related transactions by requiring that real estate appraisals used in connection with federally related transactions (Title XI appraisals) are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.6 Title XI directs the agencies to prescribe appropriate standards for Title XI appraisals under the agencies’ respective jurisdictions.7 At a minimum, Title XI provides that a Title XI appraisal must be: (1) Performed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP); (2) a written appraisal, as defined by Title XI; and (3) subject to appropriate review for compliance with USPAP.8 While appraisals ordinarily are completed before a lender and borrower close a real estate transaction, there is no specific requirement in USPAP that appraisals be completed at a specific time relative to the closing of a transaction. All federally related transactions must have Title XI appraisals. Title XI defines a federally related transaction as a real estate-related financial transaction 9 that the agencies or a financial institution regulated by the agencies engages in or contracts for, that requires the services of an appraiser.10 The agencies have authority to determine those real estaterelated financial transactions that do not 4 The term ‘‘Federal financial institutions regulatory agencies’’ means the Board, the FDIC, the OCC, the National Credit Union Administration, and, formerly, the Office of Thrift Supervision. 12 U.S.C. 3350(6). 5 These federal financial and public policy interests include those stemming from the federal government’s roles as regulator and deposit insurer of financial institutions that engage in real estate lending and investment, guarantor or lender on mortgage loans, and as a direct party in real estaterelated financial transactions. These interests have been described in predecessor legislation and accompanying Congressional reports. See Real Estate Appraisal Reform Act of 1988, H.R. Rep. No. 100–1001, pt. 1, at 19 (1988); 133 Cong. Rec. 33047– 33048 (1987). 6 12 U.S.C. 3331. 7 12 U.S.C. 3339. 8 Id. 9 12 U.S.C. 3350(5). A real estate-related financial transaction is defined as any transaction that involves: (i) The sale, lease, purchase, investment in or exchange of real property, including interests in property, or financing thereof; (ii) the refinancing of real property or interests in real property; and (iii) the use of real property or interests in property as security for a loan or investment, including mortgage-backed securities. 10 12 U.S.C. 3350(4). VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 require the services of an appraiser and thus are not required to have Title XI appraisals.11 The agencies have exercised this authority by exempting certain categories of real estate-related financial transactions from the agencies’ appraisal requirements.12 The agencies have used their safety and soundness authority to require evaluations for a subset of transactions for which an appraisal is not required.13 Under the appraisal regulations, for these transactions, financial institutions that are subject to the agencies’ appraisal regulations (regulated institutions) must obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.14 Authority to defer appraisals and evaluations. In general, the agencies require that Title XI appraisals for federally related transactions occur prior to the closing of a federally related transaction.15 The Interagency Guidelines on Appraisals and Evaluations provide similar guidance about evaluations.16 Under the interim final rule, deferrals of appraisals and evaluations allow for expeditious access to credit. The agencies authorized the deferrals, which are temporary, in response to the COVID event. Regulated institutions that defer receipt of an appraisal or evaluation are still expected to conduct their lending activity consistent with the underwriting principles in the agencies’ Standards for 11 Real estate-related financial transactions that the agencies have exempted from the appraisal requirement are not federally related transactions under the agencies’ appraisal regulations. 12 See OCC: 12 CFR 34.43(a); Board: 12 CFR 225.63(a); FDIC: 12 CFR 323.3(a). The agencies have determined that these categories of transactions do not require appraisals by state certified or state licensed appraisers in order to protect federal financial and public policy interests or to satisfy principles of safe and sound banking. 13 See OCC: 12 CFR 34.43(b); Board: 12 CFR 225.63(b); and FDIC: 12 CFR 323.3(b). Evaluations are required for exempt residential and commercial loans below the dollar value thresholds for requiring an appraisal; exempt business loans; exempt subsequent transactions; and transactions subject to the rural residential exemption. 14 The agencies have provided guidance on appraisals and evaluations through the Interagency Guidelines on Appraisals and Evaluations. See 75 FR 77450 (Dec. 10, 2010), available at https:// occ.gov/news-issuances/federal-register/2010/ 75fr77450.pdf. 15 See OCC: 12 CFR 34.42(a), 34.44(b)&(e); Board: 12 CFR 225.62(a), 225.64(b)&(e); and FDIC: 12 CFR 323.2(a), 323.4(b)&(e) (requiring an appraisal to (1) contain sufficient information and analysis to support the institution’s decision to engage in the transaction, and (2) be based on the definition of market value in the regulation, which takes into account a specified closing date for the transaction). 16 See 75 FR 77450 (Dec. 10, 2010), available at https://occ.gov/news-issuances/federal-register/ 2010/75fr77450.pdf. PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 65667 Safety and Soundness 17 and Real Estate Lending Standards 18 that focus on the ability of a borrower to repay a loan and other relevant laws and regulations. These deferrals are not an exercise of the agencies’ waiver authority, because appraisals and evaluations are being deferred, not waived. The deferrals also are not a waiver of USPAP requirements, given that (1) USPAP does not address the completion of an appraisal assignment with the timing of a lending decision; and (2) the deferred appraisal must be conducted in compliance with USPAP. The deferral of evaluations reflects the same considerations relating to the impact of the COVID event as the deferral of appraisals. The agencies require evaluations for certain exempt transactions as a matter of safety and soundness. Evaluations do not need to comply with USPAP but must be sufficiently robust to support a valuation conclusion. An evaluation can be less complex than an appraisal and usually takes less time to complete than an appraisal, and commonly involves a physical property inspection. For these reasons, the agencies also are using their safety and soundness authority 19 to allow for deferral of evaluations. By the end of the 120-day appraisal and evaluation deferral period provided by the final rule, regulated institutions must obtain appraisals or evaluations that are consistent with safe and sound banking practices, as required by the agencies’ appraisal regulations. III. Overview of the Interim Final Rule and Comments A. Overview of the Interim Final Rule The interim final rule allows a temporary deferral of the requirements for appraisals and evaluations under the agencies’ appraisal regulations. The deferrals apply to both residential and commercial real estate-related financial transactions, excluding transactions for acquisition, development, and construction of real estate. The agencies are excluding these transactions because these loans present heightened risks not associated with the financing of existing real estate. 17 OCC: 12 CFR part 30, appendix A; Board: 12 CFR part 208, appendix D–1; and FDIC: 12 CFR part 364, appendix A. 18 OCC: 12 CFR part 34, subpart D, appendix A; Board: 12 CFR part 208, subpart E, appendix C; and FDIC: 12 CFR part 365, subpart A, appendix A. Financial institutions should have a program for establishing the market value of real property to comply with these real estate lending standards, which require financial institutions to determine the value used in loan-to-value calculations based in part on a value set forth in an appraisal or an evaluation. 19 See 12 U.S.C. 1831p-1. E:\FR\FM\16OCR1.SGM 16OCR1 65668 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES Under the interim final rule, regulated institutions may close a real estate loan without a contemporaneous appraisal or evaluation, subject to a requirement that the institution obtain the appraisal or evaluation, as would have been required under the appraisal regulations without the deferral, within a period of 120 days after the closing of the transaction. While appraisals and evaluations can be deferred, the agencies expect regulated institutions to use best efforts and available information to develop a wellinformed estimate of the collateral value of the subject property. For purposes of the risk-weighting of residential mortgage exposures, an institution’s prudent underwriting estimation of the collateral value of the subject property will be considered to meet the agencies’ appraisal and evaluation requirements during the deferral period.20 In addition, the agencies continue to expect regulated institutions to adhere to internal underwriting standards for assessing borrowers’ creditworthiness and repayment capacity, and to develop procedures for estimating the collateral’s value for the purposes of extending or refinancing credit. Transactions for acquisition, development, and construction of real estate are excluded because repayment of those transactions is generally dependent on the completion or sale of the property being held as collateral as opposed to repayment generated by existing collateral or the borrower. The agencies also expect regulated institutions to develop an appropriate risk mitigation strategy if the appraisal or evaluation ultimately reveals a market value significantly lower than the expected market value. A regulated institution’s risk mitigation strategy should consider all risks that affect the institution’s safety and soundness, balanced with mitigation of financial harm to COVID event affected borrowers. The temporary provision permitting regulated institutions to defer an appraisal or evaluation for eligible transactions will expire on December 31, 2020 (a transaction closed on or before December 31, 2020, is eligible for a deferral), unless extended by the agencies. The agencies believe that the limited timeframe for the deferral strikes the right balance between safety and soundness and the need for immediate relief due to the COVID event. B. Public Comments The agencies collectively received eleven comments from trade 20 See OCC: 12 CFR 3.32(g); Board: 12 CFR 217.32(g); and FDIC: 12 CFR 324.32(g). VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 associations representing banks, appraisers, and from individuals in response to the interim final rule. The majority of commenters supported the agencies’ action and stated that appraisal and evaluation deferrals would be helpful to businesses and consumers during the COVID event. Commenters also requested clarification of certain aspects of the interim final rule. Two commenters requested that the agencies add a definition of acquisition, development, and construction transactions for purposes of this rule and that the agencies clarify risk management practices after the deferral period. Two commenters asked the agencies to reconsider the interim final rule, mainly over concern that delayed appraisals and evaluations might not support the related credit extensions and the loans would give rise to excessive leverage. One commenter asked the agencies to describe how appraisers should date deferred appraisals. One commenter asked the agencies to make the deferral permanent as a way to address the ongoing problem of appraiser shortages in rural areas. Commenters in support of the interim final rule stated that it would provide households and businesses with needed relief during the COVID event. Several commenters stated the interim final rule would provide consumers with quick access to liquidity from real estate equity. Another commenter stated that flexibilities shown by the agencies in response to the COVID event, including the temporary amendment implemented by the interim final rule, would help community banks serve their clients and would not compromise safety and soundness or credit quality. Another commenter indicated the interim final rule would alleviate a bottleneck or freeze of appraisal and evaluation services in certain geographical areas. Another commenter stated that the interim final rule would allow banks to complete real estate transactions within the normal timeframes. A commenter stated that banks would use the deferral prudently, for creditworthy borrowers. Commenters also expressed support for the agencies making the interim final rule effective immediately. Commenters who opposed the interim final rule expressed concern that the deferred appraisals and evaluations might not support the loan amount and that after the 120-day deferral period, loans would give rise to excessive leverage. Another expressed concern about sudden defaults and potential miscalculation of collateral values. Commenters also were concerned about professionalism in valuations, stating that insured professionals should be PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 involved from the outset of real estate lending. Commenters also stated that a well-informed estimate of collateral value, as required by the interim final rule, may be difficult to develop for complex commercial real estate transactions. Definition of Acquisition, Development, and Construction Two commenters requested the agencies provide clarity about the scope of ‘‘acquisition, development, and construction’’ transactions that are excluded from the interim final rule. One commenter stated there is confusion in the industry about the meaning of the term. Another commenter asked the agencies to confirm that the definition found in the instructions to the Federal Financial Institutions Examination Council (FFIEC) Schedule RC–C, Part I, ‘‘Loan and Leases,’’ 21 of the Consolidated Reports of Condition and Income (Call Report), for the three versions of the Call Report (FFIEC 031, FFIEC 041, and FFIEC 051), is the definition that should apply to real estate appraisals for purposes of ‘‘acquisition, development, and construction’’ in the interim final rule. After consideration of these comments, the agencies are clarifying that transactions for the ‘‘acquisition, development, and construction’’ of real estate excluded from the 120-day deferral period mean, for purposes of this rule, those loans described in the Instructions for Schedule RC–C, ‘‘Loans and Lease Financing Receivables,’’ Part I, ‘‘Loans and Leases,’’ item 1.a, ‘‘Construction, land development, and other land loans,’’ of the Call Report. The instructions for Schedule RC–C describe such loans as loans secured by real estate made to finance (a) land development (i.e., the process of improving land—laying sewers, water pipes, etc.) preparatory to erecting new structures, (b) the on-site construction of industrial, commercial, residential, or farm buildings (including 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), (c) loans secured by vacant land, except land known to be used or useable for agricultural purposes, such as crop and livestock production, (d) loans secured by real estate the proceeds of which are to be used to acquire and improve developed and undeveloped 21 See https://www.ffiec.gov/pdf/FFIEC_forms/ FFIEC031_FFIEC041_202006_i.pdf. See also https:// www.ffiec.gov/pdf/FFIEC_forms/FFIEC051_202006_ i.pdf. E:\FR\FM\16OCR1.SGM 16OCR1 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations property, and (e) 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. This is consistent with the agencies’ intent in excluding certain ‘‘acquisition, development, and construction’’ transactions from the 120day deferral period, and reflects institutions’ routine reporting of such assets for purposes of the Call Report. jbell on DSKJLSW7X2PROD with RULES Managing Loans Using COVID Event Flexibilities One commenter requested that the agencies clarify post-crisis expectations for managing loans for which regulatory flexibilities have been used. Generally, the agencies expect that, after the COVID event, banks should continue to adhere to practices consistent with the established safety and soundness standards and should refer to risk management guidance for managing loans that have been issued during the COVID event. Existing flexibilities in appraisal standards and the interagency appraisal regulations are described in the Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus.22 Institutions should also consider the Joint Statement on Additional Loan Accommodations Related to COVID–19 23 (Joint Statement), issued by the FFIEC member agencies.24 The Joint Statement provides guidance on managing loans as they approach the end of COVID eventrelated accommodation periods. The Joint Statement also provides guidance on offering additional accommodations. Commenters also requested that the agencies provide a remedy for loans with deferred appraisals when the appraised value is lower than expected. The agencies did not prescribe methods or documentation standards for valuations estimated during the deferral period, but prudent institutions should retain information that was used to support a best estimate. Institutions should continue to develop a loan-tovalue estimate in accordance with real 22 See Interagency Statement on Appraisals and Evaluations for Real Estate Related Transactions Affected by the Coronavirus (Apr. 14, 2020), available at https://www.occ.gov/news-issuances/ news-releases/2020/nr-ia-2020-54.html. 23 Joint Statement on Additional Loan Accommodations Related to COVID–19, OCC Bulletin 2020–72; Board SR Letter 20–18; FDIC Financial Institution Letter FIL–74–2020. 24 The FFIEC is composed of the following: a member of the Board, appointed by the Chairman of the Board; the Chairman of the FDIC; the Chairman of the National Credit Union Administration; the Comptroller of the OCC; the Director of the Bureau of Consumer Financial Protection; and, the Chairman of the State Liaison Committee. VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 estate lending standards and overall standards for safety and soundness. Some examples of information that may help to develop an informed estimate are existing appraisals, tax assessed values, comparable sales, and lender estimates. As stated in the interim final rule, the agencies expect each institution to develop an appropriate risk mitigation strategy if the appraisal or evaluation ultimately determines a market value for a property that is significantly lower than expected when the loan was made. Appropriate risk mitigation strategies may vary based on circumstances and borrower. The Joint Statement clarifies that a reasonable accommodation may not necessarily result in an adverse risk rating solely because of a decline in the value of underlying collateral, provided that the borrower has the ability to perform according to the terms of the loan. However, institutions should recognize a heightened degree of risk if the subsequently obtained appraisal or evaluation ultimately reveals a market value significantly lower than the expected market value and take appropriate action to mitigate the risk. Other Expectations for Deferred Appraisals A commenter requested guidance on what effective date appraisers should use for appraisals that are deferred for 120 days. The agencies continue to leave the effective dates for these transactions to the discretion of the bank as established by the scope of work of the appraisal engagement. Another commenter suggested the agencies tailor the interim final rule to different types of real estate or based on the price of the property. Another commenter requested the agencies make the changes in the interim final rule and the Interagency Statement on Appraisals and Evaluations for Real Estate Related Transactions Affected by the Coronavirus 25 permanent. The agencies have no plans to extend or change the interim final rule at this time but will continue to consider flexibilities as needed while supporting safe and sound collateral valuation practices during and after the COVID event. IV. Summary of the Final Rule For the reasons discussed above, the agencies are adopting as final the interim final rule with one revision, which is the clarification of the meaning of ‘‘acquisition, development, and 25 Press Release: Interagency Statement on Appraisals and Evaluations for Real Estate Related Transactions Affected by the Coronavirus (Apr. 14, 2020). PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 65669 construction loans.’’ Accordingly, under the final rule, regulated institutions may defer required appraisals and evaluations for up to 120 days for all residential and commercial real estatesecured transactions, excluding transactions for acquisition, development, and construction of real estate, which mean, for purposes of this rule, loans secured by real estate made to finance (a) land development (i.e., the process of improving land—laying sewers, water pipes, etc.) preparatory to erecting new structures, (b) the on-site construction of industrial, commercial, residential, or farm buildings (including 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), (c) loans secured by vacant land, except land known to be used or useable for agricultural purposes, such as crop and livestock production, (d) loans secured by real estate the proceeds of which are to be used to acquire and improve developed and undeveloped property, and (e) 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 temporary provision allowing regulated institutions to defer appraisals or evaluations for covered transactions will expire on December 31, 2020, unless extended by the agencies. As with the interim final rule, this final rule does not revise any of the existing appraisal exceptions or any other requirements with respect to the performance of evaluations. The agencies expect all appraisals, including deferred appraisals, to comply with USPAP, as issued by the Appraisal Standards Board of the Appraisal Foundation. V. Administrative Law Matters A. Administrative Procedure Act The Administrative Procedure Act (APA) generally requires that a final rule be published in the Federal Register no less than 30 days before its effective date except for (1) substantive rules, which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.26 Because the final rule relieves a restriction, the final rule is exempt from the APA’s delayed effective date requirement.27 Additionally, the agencies find good cause to publish the final rule with an 26 5 27 5 E:\FR\FM\16OCR1.SGM U.S.C. 553(d). U.S.C. 553(d)(1). 16OCR1 65670 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES immediate effective date. The agencies believe that the public interest is best served by implementing the final rule as soon as possible. As discussed above, recent events have suddenly and significantly affected global economic activity, increasing businesses’ and households’ need to have timely access to liquidity from real estate equity. In addition, the spread of COVID–19 has greatly increased the difficulty of performing real estate appraisals and evaluations in a timely manner. The relief provided by the final rule will continue to allow regulated institutions to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of COVID–19, while reaffirming the safety and soundness principle that valuation of collateral is an essential part of the lending decision. Finally, the agencies believe that implementing the final rule as soon as possible, with its clarifying language, is consistent with the agencies’ intent to continue to grant expedited relief to the regulated entities. Therefore, the final rule will become effective October 16, 2020 through December 31, 2020. B. Congressional Review Act For purposes of Congressional Review Act, the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a ‘‘major’’ rule.28 If a rule is deemed a ‘‘major rule’’ by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.29 The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.30 As required by the Congressional Review Act, the agencies will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review. U.S.C. 801 et seq. U.S.C. 801(a)(3). 30 5 U.S.C. 804(2). C. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995 31 (PRA), the agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid OMB control number. The agencies have reviewed this final rule and determined that it would not introduce any new or revise any collection of information pursuant to the PRA. Therefore, no submissions will be made to OMB for review. D. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). Since the agencies were not required to issue a general notice of proposed rulemaking associated with the interim final rule or this final rule, no RFA is required. Accordingly, the agencies have concluded that the RFA’s requirements relating to initial and final regulatory flexibility analysis do not apply. E. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),32 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with the principle of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosure, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.33 Each Federal banking agency has determined that the final rule would not impose any additional 28 5 31 44 29 5 32 12 VerDate Sep<11>2014 16:47 Oct 15, 2020 U.S.C. 3501–3521. U.S.C. 4802(a). 33 12 U.S.C. 4802. Jkt 253001 PO 00000 Frm 00020 Fmt 4700 reporting, disclosure, or other new requirements on IDIs, and thus the requirements of the RCDRIA do not apply. F. Use of Plain Language Section 722 of the Gramm-LeachBliley Act 34 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies have sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language. G. OCC Unfunded Mandates Reform Act of 1995 Determination Under the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531 et seq., the OCC prepares a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. However, the UMRA does not apply to final rules for which a general notice of proposed rulemaking was not published.35 Therefore, because the OCC found good cause to dispense with notice and comment for the interim final rule, the OCC has not prepared an economic analysis of the final rule under the UMRA. List of Subjects 12 CFR Part 34 Appraisal, Appraiser, Banks, banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. 12 CFR Part 225 Administrative practice and procedure, Banks, banking, Federal Reserve System, Capital planning, Holding companies, Reporting and recordkeeping requirements, Securities, Stress testing. 12 CFR Part 323 Banks, banking, Mortgages, Reporting and recordkeeping requirements, Savings associations. DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Chapter I Authority and Issuance For the reasons set forth in the joint preamble, the OCC amends part 34 of 34 12 U.S.C. 4809. 2 U.S.C. 1532(a). 35 See Sfmt 4700 E:\FR\FM\16OCR1.SGM 16OCR1 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations paragraph (f) of this section will expire for transactions closing after December 31, 2020. chapter I of title 12 of the Code of Federal Regulations as follows: PART 34—REAL ESTATE LENDING AND APPRAISALS Federal Reserve Board 12 CFR Chapter II 1. The authority citation for part 34 continues to read as follows: ■ Authority and Issuance Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463, 1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and 5412(b)(2)(B) and 15 U.S.C. 1639h. 2. Section 34.43 is amended by revising paragraph (f) to read as follows: For the reasons set forth in the joint preamble, the Board amends part 225 of chapter II of title 12 of the Code of Federal Regulations as follows: ■ § 34.43 Appraisals required; transactions requiring a State certified or licensed appraiser. jbell on DSKJLSW7X2PROD with RULES * * * * * (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 estatesecured 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 VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 PART 225—BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y) 3. The authority citation for part 225 continues to read as follows: ■ Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331–3351, 3906, 3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805. 4. Section 225.63 is amended by revising paragraph (f) to read as follows: ■ § 225.63 Appraisals required; transactions requiring a State certified or 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 estatesecured 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; PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 65671 (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. Federal Deposit Insurance Corporation 12 CFR Chapter III Authority and Issuance For the reasons set forth in the joint preamble, the FDIC amends part 323 of chapter III of title 12 of the Code of Federal Regulations as follows: PART 323—APPRAISALS 5. The authority citation for part 323 continues to read as follows: ■ Authority: 12 U.S.C. 1818, 1819(a) (‘‘Seventh’’ and ‘‘Tenth’’), 1831p–1 and 3331 et seq. 6. Section 323.3 is amended by revising paragraph (g) to read as follows: ■ § 323.3 Appraisals required; transactions requiring a State certified or licensed appraiser. * * * * * (g) 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 (g)(1) of this section apply to all residential and commercial real estatesecured transactions, excluding transactions for the acquisition, development, and construction of real estate which, for purposes of this rule, mean those loans described in paragraphs (g)(2)(i) through (iv) of this section. The term ‘‘construction’’ as used in this paragraph (g)(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 (g)(1) of this section: E:\FR\FM\16OCR1.SGM 16OCR1 65672 Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations (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 (g)(2) of this section; and (B) Are secured by real estate. (3) Sunset. The appraisal and evaluation deferrals authorized by this paragraph (g) will expire for transactions closing after December 31, 2020. Brian P. Brooks Acting Comptroller of the Currency Office of the Comptroller of the Currency Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on or about September 15, 2020. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2020–21563 Filed 10–15–20; 8:45 am] BILLING CODE 4810–33–P 6210–01–P 6714–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2020–0676; Product Identifier 2020–NM–085–AD; Amendment 39–21287; AD 2020–21–14] RIN 2120–AA64 Airworthiness Directives; ATR—GIE Avions de Transport Re´gional Airplanes Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. jbell on DSKJLSW7X2PROD with RULES AGENCY: The FAA is adopting a new airworthiness directive (AD) for all ATR—GIE Avions de Transport Re´gional Model ATR72 airplanes. This AD was prompted by reports of main landing gear (MLG) hinge pins found SUMMARY: VerDate Sep<11>2014 16:47 Oct 15, 2020 Jkt 253001 cracked or thermally abused. This AD requires replacing certain MLG hinge pins with serviceable parts, or replacing an MLG equipped with any affected MLG hinge pin with an MLG equipped with serviceable MLG hinge pins, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD is effective November 20, 2020. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of November 20, 2020. ADDRESSES: For material incorporated by reference (IBR) in this AD, contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email ADs@ easa.europa.eu; internet www.easa.europa.eu. You may find this IBR material on the EASA website at https://ad.easa.europa.eu. You may view this IBR material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206–231–3195. It is also available in the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0676. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0676; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, any comments received, and other information. The address for Docket Operations is U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Shahram Daneshmandi, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206–231– 3220; email Shahram.Daneshmandi@ faa.gov. SUPPLEMENTARY INFORMATION: Discussion The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 2020–0101, dated May 5, 2020 (‘‘EASA AD 2020–0101’’) (also referred to as the Mandatory Continuing Airworthiness Information, or ‘‘the MCAI’’), to correct an unsafe condition for all ATR—GIE Avions de Transport Re´gional Model ATR72 airplanes. The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all ATR—GIE Avions de Transport Re´gional Model ATR72 airplanes. The NPRM published in the Federal Register on July 31, 2020 (85 FR 46010). The NPRM was prompted by MLG hinge pins found cracked or thermally abused. The NPRM proposed to require replacing certain MLG hinge pins with serviceable parts, or replacing an MLG equipped with any affected MLG hinge pin with an MLG equipped with serviceable MLG hinge pins, as specified in EASA AD 2020–0101. The FAA is issuing this AD to address MLG hinge pins subjected to a nondetected thermal abuse during production, which could lead to structural failure and consequent collapse of the MLG, resulting in damage to the airplane and injury to the occupants. See the MCAI for additional background information. Comments The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the NPRM or on the determination of the cost to the public. Conclusion The FAA reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes: • Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and • Do not add any additional burden upon the public than was already proposed in the NPRM. Related IBR Material Under 1 CFR Part 51 EASA AD 2020–0101 describes procedures for replacing certain MLG hinge pins with serviceable parts, or replacing an MLG equipped with any affected MLG hinge pin with an MLG equipped with serviceable MLG hinge pins. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section. E:\FR\FM\16OCR1.SGM 16OCR1

Agencies

[Federal Register Volume 85, Number 201 (Friday, October 16, 2020)]
[Rules and Regulations]
[Pages 65666-65672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21563]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket No. OCC-2020-0014]
RIN 1557-AE86

FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Docket No. R-1713]
RIN 7100-AF87

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 323

RIN 3064-AF48


Real Estate Appraisals

AGENCY: The Office of the Comptroller of the Currency, Treasury (OCC); 
the Board of Governors of the Federal Reserve System (Board); and the 
Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The OCC, Board, and FDIC (collectively, the agencies) are 
adopting as final the interim final rule published by the agencies on 
April 17, 2020, making temporary amendments to the agencies' 
regulations requiring appraisals for certain real estate-related 
transactions. The final rule adopts the deferral of the requirement to 
obtain an appraisal or evaluation for up to 120 days following the 
closing of certain residential and commercial real estate transactions, 
excluding transactions for acquisition, development, and construction 
of real estate. Regulated institutions should make best efforts to 
obtain a credible estimate of the value of real property collateral 
before closing the loan and otherwise underwrite loans consistent with 
the principles in the agencies' Standards for Safety and Soundness and 
Real Estate Lending Standards. The agencies' final rule allows 
regulated institutions to expeditiously extend liquidity to 
creditworthy households and businesses in light of recent strains on 
the U.S. economy as a result of the coronavirus disease 2019 (COVID 
event). The final rule adopts the interim final rule with one revision 
in response to comments received by the agencies on the interim final 
rule.

DATES: The final rule is effective October 16, 2020 through December 
31, 2020.

FOR FURTHER INFORMATION CONTACT: 
    OCC: G. Kevin Lawton, Appraiser (Real Estate Specialist), (202) 
649-6670; Mitchell Plave, Special Counsel, (202) 649-5490; or Joanne 
Phillips, Counsel, Chief Counsel's Office (202) 649-5500; Office of the 
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. 
For persons who are deaf or hearing impaired, TTY users may contact 
(202) 649-5597.
    Board: Anna Lee Hewko, Associate Director, (202) 530-6260; Teresa 
A. Scott, Manager, Policy Development Section, (202) 973-6114; Carmen 
Holly, Lead Financial Institution Policy Analyst, (202) 973-6122; Devyn 
Jeffereis, Senior Financial Institution Policy Analyst, (202) 365-2467, 
Division of Supervision and Regulation; Laurie Schaffer, Deputy General 
Counsel, (202) 452-2272; Derald Seid, Senior Counsel, (202) 452-2246; 
Trevor Feigleson, Counsel, (202) 452-3274; David Imhoff, Attorney, 
(202) 452-2249, Legal Division, Board of Governors of the Federal 
Reserve System, 20th and C Streets NW, Washington, DC 20551. For the 
hearing impaired only, Telecommunications Device for the Deaf (TDD) 
users may contact (202) 263-4869.
    FDIC: Beverlea S. Gardner, Senior Examination Specialist, Division 
of Risk Management and Supervision, (202) 898-3640, [email protected]; 
Mark Mellon, Counsel, Legal Division, (202) 898-3884; or, Lauren 
Whitaker, Senior Attorney, Legal Division, (202) 898-3872, Federal 
Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 
20429. For the hearing impaired only, TDD users may contact (202) 925-
4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Background
III. Overview of the Interim Final Rule and Comments
    A. Overview of the Interim Final Rule
    B. Public Comments
IV. Summary of the Final Rule
V. Administrative Law Matters
    A. Administrative Procedure Act
    B. Congressional Review Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Riegle Community Development and Regulatory Improvement Act 
of 1994
    F. Use of Plain Language
    G. OCC Unfunded Mandates Reform Act of 1995 Determination

I. Introduction

    Impact of the COVID event on appraisals and evaluations. Due to the 
impact of the COVID event \1\ and the need for businesses and 
individuals to quickly access additional liquidity, the agencies 
published an interim final rule in the Federal Register on April 17, 
2020 (interim final rule),\2\ that deferred 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, excluding transactions for acquisition, development, and 
construction of real estate. The interim final rule allows businesses 
and individuals to quickly access liquidity from real estate equity 
during the COVID event.
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    \1\ The coronavirus disease 2019 outbreak was declared a 
national emergency under Proclamation No. 9994, 85 FR 15337 (Mar. 
18, 2020).
    \2\ 85 FR 21312.
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    The agencies are adopting the interim final rule as final, with one 
revision in response to comments. The amendments to the agencies' 
appraisal regulations allow for the deferral of appraisals and 
evaluations for qualifying transactions through December 31, 2020, as 
detailed further below.

II. Background

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (Title XI) \3\ directs each Federal

[[Page 65667]]

financial institutions regulatory agency to publish appraisal 
regulations for federally related transactions within its 
jurisdiction.\4\ The purpose of Title XI is to protect federal 
financial and public policy interests \5\ in real estate-related 
transactions by requiring that real estate appraisals used in 
connection with federally related transactions (Title XI appraisals) 
are performed in writing, in accordance with uniform standards, by 
individuals whose competency has been demonstrated and whose 
professional conduct will be subject to effective supervision.\6\
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    \3\ 12 U.S.C. 3331 et seq.; Public Law 101-73, 103 Stat. 183 
(1989).
    \4\ The term ``Federal financial institutions regulatory 
agencies'' means the Board, the FDIC, the OCC, the National Credit 
Union Administration, and, formerly, the Office of Thrift 
Supervision. 12 U.S.C. 3350(6).
    \5\ These federal financial and public policy interests include 
those stemming from the federal government's roles as regulator and 
deposit insurer of financial institutions that engage in real estate 
lending and investment, guarantor or lender on mortgage loans, and 
as a direct party in real estate-related financial transactions. 
These interests have been described in predecessor legislation and 
accompanying Congressional reports. See Real Estate Appraisal Reform 
Act of 1988, H.R. Rep. No. 100-1001, pt. 1, at 19 (1988); 133 Cong. 
Rec. 33047-33048 (1987).
    \6\ 12 U.S.C. 3331.
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    Title XI directs the agencies to prescribe appropriate standards 
for Title XI appraisals under the agencies' respective 
jurisdictions.\7\ At a minimum, Title XI provides that a Title XI 
appraisal must be: (1) Performed in accordance with the Uniform 
Standards of Professional Appraisal Practice (USPAP); (2) a written 
appraisal, as defined by Title XI; and (3) subject to appropriate 
review for compliance with USPAP.\8\ While appraisals ordinarily are 
completed before a lender and borrower close a real estate transaction, 
there is no specific requirement in USPAP that appraisals be completed 
at a specific time relative to the closing of a transaction.
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    \7\ 12 U.S.C. 3339.
    \8\ Id.
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    All federally related transactions must have Title XI appraisals. 
Title XI defines a federally related transaction as a real estate-
related financial transaction \9\ that the agencies or a financial 
institution regulated by the agencies engages in or contracts for, that 
requires the services of an appraiser.\10\ The agencies have authority 
to determine those real estate-related financial transactions that do 
not require the services of an appraiser and thus are not required to 
have Title XI appraisals.\11\ The agencies have exercised this 
authority by exempting certain categories of real estate-related 
financial transactions from the agencies' appraisal requirements.\12\
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    \9\ 12 U.S.C. 3350(5). A real estate-related financial 
transaction is defined as any transaction that involves: (i) The 
sale, lease, purchase, investment in or exchange of real property, 
including interests in property, or financing thereof; (ii) the 
refinancing of real property or interests in real property; and 
(iii) the use of real property or interests in property as security 
for a loan or investment, including mortgage-backed securities.
    \10\ 12 U.S.C. 3350(4).
    \11\ Real estate-related financial transactions that the 
agencies have exempted from the appraisal requirement are not 
federally related transactions under the agencies' appraisal 
regulations.
    \12\ See OCC: 12 CFR 34.43(a); Board: 12 CFR 225.63(a); FDIC: 12 
CFR 323.3(a). The agencies have determined that these categories of 
transactions do not require appraisals by state certified or state 
licensed appraisers in order to protect federal financial and public 
policy interests or to satisfy principles of safe and sound banking.
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    The agencies have used their safety and soundness authority to 
require evaluations for a subset of transactions for which an appraisal 
is not required.\13\ Under the appraisal regulations, for these 
transactions, financial institutions that are subject to the agencies' 
appraisal regulations (regulated institutions) must obtain an 
appropriate evaluation of real property collateral that is consistent 
with safe and sound banking practices.\14\
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    \13\ See OCC: 12 CFR 34.43(b); Board: 12 CFR 225.63(b); and 
FDIC: 12 CFR 323.3(b). Evaluations are required for exempt 
residential and commercial loans below the dollar value thresholds 
for requiring an appraisal; exempt business loans; exempt subsequent 
transactions; and transactions subject to the rural residential 
exemption.
    \14\ The agencies have provided guidance on appraisals and 
evaluations through the Interagency Guidelines on Appraisals and 
Evaluations. See 75 FR 77450 (Dec. 10, 2010), available at https://occ.gov/news-issuances/federal-register/2010/75fr77450.pdf.
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    Authority to defer appraisals and evaluations. In general, the 
agencies require that Title XI appraisals for federally related 
transactions occur prior to the closing of a federally related 
transaction.\15\ The Interagency Guidelines on Appraisals and 
Evaluations provide similar guidance about evaluations.\16\ Under the 
interim final rule, deferrals of appraisals and evaluations allow for 
expeditious access to credit. The agencies authorized the deferrals, 
which are temporary, in response to the COVID event. Regulated 
institutions that defer receipt of an appraisal or evaluation are still 
expected to conduct their lending activity consistent with the 
underwriting principles in the agencies' Standards for Safety and 
Soundness \17\ and Real Estate Lending Standards \18\ that focus on the 
ability of a borrower to repay a loan and other relevant laws and 
regulations. These deferrals are not an exercise of the agencies' 
waiver authority, because appraisals and evaluations are being 
deferred, not waived. The deferrals also are not a waiver of USPAP 
requirements, given that (1) USPAP does not address the completion of 
an appraisal assignment with the timing of a lending decision; and (2) 
the deferred appraisal must be conducted in compliance with USPAP.
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    \15\ See OCC: 12 CFR 34.42(a), 34.44(b)&(e); Board: 12 CFR 
225.62(a), 225.64(b)&(e); and FDIC: 12 CFR 323.2(a), 323.4(b)&(e) 
(requiring an appraisal to (1) contain sufficient information and 
analysis to support the institution's decision to engage in the 
transaction, and (2) be based on the definition of market value in 
the regulation, which takes into account a specified closing date 
for the transaction).
    \16\ See 75 FR 77450 (Dec. 10, 2010), available at https://occ.gov/news-issuances/federal-register/2010/75fr77450.pdf.
    \17\ OCC: 12 CFR part 30, appendix A; Board: 12 CFR part 208, 
appendix D-1; and FDIC: 12 CFR part 364, appendix A.
    \18\ OCC: 12 CFR part 34, subpart D, appendix A; Board: 12 CFR 
part 208, subpart E, appendix C; and FDIC: 12 CFR part 365, subpart 
A, appendix A. Financial institutions should have a program for 
establishing the market value of real property to comply with these 
real estate lending standards, which require financial institutions 
to determine the value used in loan-to-value calculations based in 
part on a value set forth in an appraisal or an evaluation.
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    The deferral of evaluations reflects the same considerations 
relating to the impact of the COVID event as the deferral of 
appraisals. The agencies require evaluations for certain exempt 
transactions as a matter of safety and soundness. Evaluations do not 
need to comply with USPAP but must be sufficiently robust to support a 
valuation conclusion. An evaluation can be less complex than an 
appraisal and usually takes less time to complete than an appraisal, 
and commonly involves a physical property inspection. For these 
reasons, the agencies also are using their safety and soundness 
authority \19\ to allow for deferral of evaluations.
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    \19\ See 12 U.S.C. 1831p-1.
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    By the end of the 120-day appraisal and evaluation deferral period 
provided by the final rule, regulated institutions must obtain 
appraisals or evaluations that are consistent with safe and sound 
banking practices, as required by the agencies' appraisal regulations.

III. Overview of the Interim Final Rule and Comments

A. Overview of the Interim Final Rule

    The interim final rule allows a temporary deferral of the 
requirements for appraisals and evaluations under the agencies' 
appraisal regulations. The deferrals apply to both residential and 
commercial real estate-related financial transactions, excluding 
transactions for acquisition, development, and construction of real 
estate. The agencies are excluding these transactions because these 
loans present heightened risks not associated with the financing of 
existing real estate.

[[Page 65668]]

    Under the interim final rule, regulated institutions may close a 
real estate loan without a contemporaneous appraisal or evaluation, 
subject to a requirement that the institution obtain the appraisal or 
evaluation, as would have been required under the appraisal regulations 
without the deferral, within a period of 120 days after the closing of 
the transaction. While appraisals and evaluations can be deferred, the 
agencies expect regulated institutions to use best efforts and 
available information to develop a well-informed estimate of the 
collateral value of the subject property. For purposes of the risk-
weighting of residential mortgage exposures, an institution's prudent 
underwriting estimation of the collateral value of the subject property 
will be considered to meet the agencies' appraisal and evaluation 
requirements during the deferral period.\20\ In addition, the agencies 
continue to expect regulated institutions to adhere to internal 
underwriting standards for assessing borrowers' creditworthiness and 
repayment capacity, and to develop procedures for estimating the 
collateral's value for the purposes of extending or refinancing credit. 
Transactions for acquisition, development, and construction of real 
estate are excluded because repayment of those transactions is 
generally dependent on the completion or sale of the property being 
held as collateral as opposed to repayment generated by existing 
collateral or the borrower. The agencies also expect regulated 
institutions to develop an appropriate risk mitigation strategy if the 
appraisal or evaluation ultimately reveals a market value significantly 
lower than the expected market value. A regulated institution's risk 
mitigation strategy should consider all risks that affect the 
institution's safety and soundness, balanced with mitigation of 
financial harm to COVID event affected borrowers. The temporary 
provision permitting regulated institutions to defer an appraisal or 
evaluation for eligible transactions will expire on December 31, 2020 
(a transaction closed on or before December 31, 2020, is eligible for a 
deferral), unless extended by the agencies. The agencies believe that 
the limited timeframe for the deferral strikes the right balance 
between safety and soundness and the need for immediate relief due to 
the COVID event.
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    \20\ See OCC: 12 CFR 3.32(g); Board: 12 CFR 217.32(g); and FDIC: 
12 CFR 324.32(g).
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B. Public Comments

    The agencies collectively received eleven comments from trade 
associations representing banks, appraisers, and from individuals in 
response to the interim final rule. The majority of commenters 
supported the agencies' action and stated that appraisal and evaluation 
deferrals would be helpful to businesses and consumers during the COVID 
event. Commenters also requested clarification of certain aspects of 
the interim final rule. Two commenters requested that the agencies add 
a definition of acquisition, development, and construction transactions 
for purposes of this rule and that the agencies clarify risk management 
practices after the deferral period. Two commenters asked the agencies 
to reconsider the interim final rule, mainly over concern that delayed 
appraisals and evaluations might not support the related credit 
extensions and the loans would give rise to excessive leverage. One 
commenter asked the agencies to describe how appraisers should date 
deferred appraisals. One commenter asked the agencies to make the 
deferral permanent as a way to address the ongoing problem of appraiser 
shortages in rural areas.
    Commenters in support of the interim final rule stated that it 
would provide households and businesses with needed relief during the 
COVID event. Several commenters stated the interim final rule would 
provide consumers with quick access to liquidity from real estate 
equity. Another commenter stated that flexibilities shown by the 
agencies in response to the COVID event, including the temporary 
amendment implemented by the interim final rule, would help community 
banks serve their clients and would not compromise safety and soundness 
or credit quality. Another commenter indicated the interim final rule 
would alleviate a bottleneck or freeze of appraisal and evaluation 
services in certain geographical areas. Another commenter stated that 
the interim final rule would allow banks to complete real estate 
transactions within the normal timeframes. A commenter stated that 
banks would use the deferral prudently, for creditworthy borrowers. 
Commenters also expressed support for the agencies making the interim 
final rule effective immediately.
    Commenters who opposed the interim final rule expressed concern 
that the deferred appraisals and evaluations might not support the loan 
amount and that after the 120-day deferral period, loans would give 
rise to excessive leverage. Another expressed concern about sudden 
defaults and potential miscalculation of collateral values. Commenters 
also were concerned about professionalism in valuations, stating that 
insured professionals should be involved from the outset of real estate 
lending. Commenters also stated that a well-informed estimate of 
collateral value, as required by the interim final rule, may be 
difficult to develop for complex commercial real estate transactions.
Definition of Acquisition, Development, and Construction
    Two commenters requested the agencies provide clarity about the 
scope of ``acquisition, development, and construction'' transactions 
that are excluded from the interim final rule. One commenter stated 
there is confusion in the industry about the meaning of the term. 
Another commenter asked the agencies to confirm that the definition 
found in the instructions to the Federal Financial Institutions 
Examination Council (FFIEC) Schedule RC-C, Part I, ``Loan and Leases,'' 
\21\ of the Consolidated Reports of Condition and Income (Call Report), 
for the three versions of the Call Report (FFIEC 031, FFIEC 041, and 
FFIEC 051), is the definition that should apply to real estate 
appraisals for purposes of ``acquisition, development, and 
construction'' in the interim final rule.
---------------------------------------------------------------------------

    \21\ See https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_FFIEC041_202006_i.pdf. See also https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC051_202006_i.pdf.
---------------------------------------------------------------------------

    After consideration of these comments, the agencies are clarifying 
that transactions for the ``acquisition, development, and 
construction'' of real estate excluded from the 120-day deferral period 
mean, for purposes of this rule, those loans described in the 
Instructions for Schedule RC-C, ``Loans and Lease Financing 
Receivables,'' Part I, ``Loans and Leases,'' item 1.a, ``Construction, 
land development, and other land loans,'' of the Call Report. The 
instructions for Schedule RC-C describe such loans as loans secured by 
real estate made to finance (a) land development (i.e., the process of 
improving land--laying sewers, water pipes, etc.) preparatory to 
erecting new structures, (b) the on-site construction of industrial, 
commercial, residential, or farm buildings (including 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), (c) loans secured by vacant land, except land 
known to be used or useable for agricultural purposes, such as crop and 
livestock production, (d) loans secured by real estate the proceeds of 
which are to be used to acquire and improve developed and undeveloped

[[Page 65669]]

property, and (e) 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. This is consistent with the 
agencies' intent in excluding certain ``acquisition, development, and 
construction'' transactions from the 120-day deferral period, and 
reflects institutions' routine reporting of such assets for purposes of 
the Call Report.
Managing Loans Using COVID Event Flexibilities
    One commenter requested that the agencies clarify post-crisis 
expectations for managing loans for which regulatory flexibilities have 
been used. Generally, the agencies expect that, after the COVID event, 
banks should continue to adhere to practices consistent with the 
established safety and soundness standards and should refer to risk 
management guidance for managing loans that have been issued during the 
COVID event. Existing flexibilities in appraisal standards and the 
interagency appraisal regulations are described in the Interagency 
Statement on Appraisals and Evaluations for Real Estate Related 
Financial Transactions Affected by the Coronavirus.\22\ Institutions 
should also consider the Joint Statement on Additional Loan 
Accommodations Related to COVID-19 \23\ (Joint Statement), issued by 
the FFIEC member agencies.\24\ The Joint Statement provides guidance on 
managing loans as they approach the end of COVID event-related 
accommodation periods. The Joint Statement also provides guidance on 
offering additional accommodations.
---------------------------------------------------------------------------

    \22\ See Interagency Statement on Appraisals and Evaluations for 
Real Estate Related Transactions Affected by the Coronavirus (Apr. 
14, 2020), available at https://www.occ.gov/news-issuances/news-releases/2020/nr-ia-2020-54.html.
    \23\ Joint Statement on Additional Loan Accommodations Related 
to COVID-19, OCC Bulletin 2020-72; Board SR Letter 20-18; FDIC 
Financial Institution Letter FIL-74-2020.
    \24\ The FFIEC is composed of the following: a member of the 
Board, appointed by the Chairman of the Board; the Chairman of the 
FDIC; the Chairman of the National Credit Union Administration; the 
Comptroller of the OCC; the Director of the Bureau of Consumer 
Financial Protection; and, the Chairman of the State Liaison 
Committee.
---------------------------------------------------------------------------

    Commenters also requested that the agencies provide a remedy for 
loans with deferred appraisals when the appraised value is lower than 
expected. The agencies did not prescribe methods or documentation 
standards for valuations estimated during the deferral period, but 
prudent institutions should retain information that was used to support 
a best estimate. Institutions should continue to develop a loan-to-
value estimate in accordance with real estate lending standards and 
overall standards for safety and soundness. Some examples of 
information that may help to develop an informed estimate are existing 
appraisals, tax assessed values, comparable sales, and lender 
estimates. As stated in the interim final rule, the agencies expect 
each institution to develop an appropriate risk mitigation strategy if 
the appraisal or evaluation ultimately determines a market value for a 
property that is significantly lower than expected when the loan was 
made. Appropriate risk mitigation strategies may vary based on 
circumstances and borrower. The Joint Statement clarifies that a 
reasonable accommodation may not necessarily result in an adverse risk 
rating solely because of a decline in the value of underlying 
collateral, provided that the borrower has the ability to perform 
according to the terms of the loan. However, institutions should 
recognize a heightened degree of risk if the subsequently obtained 
appraisal or evaluation ultimately reveals a market value significantly 
lower than the expected market value and take appropriate action to 
mitigate the risk.
Other Expectations for Deferred Appraisals
    A commenter requested guidance on what effective date appraisers 
should use for appraisals that are deferred for 120 days. The agencies 
continue to leave the effective dates for these transactions to the 
discretion of the bank as established by the scope of work of the 
appraisal engagement. Another commenter suggested the agencies tailor 
the interim final rule to different types of real estate or based on 
the price of the property. Another commenter requested the agencies 
make the changes in the interim final rule and the Interagency 
Statement on Appraisals and Evaluations for Real Estate Related 
Transactions Affected by the Coronavirus \25\ permanent. The agencies 
have no plans to extend or change the interim final rule at this time 
but will continue to consider flexibilities as needed while supporting 
safe and sound collateral valuation practices during and after the 
COVID event.
---------------------------------------------------------------------------

    \25\ Press Release: Interagency Statement on Appraisals and 
Evaluations for Real Estate Related Transactions Affected by the 
Coronavirus (Apr. 14, 2020).
---------------------------------------------------------------------------

IV. Summary of the Final Rule

    For the reasons discussed above, the agencies are adopting as final 
the interim final rule with one revision, which is the clarification of 
the meaning of ``acquisition, development, and construction loans.'' 
Accordingly, under the final rule, regulated institutions may defer 
required appraisals and evaluations for up to 120 days for all 
residential and commercial real estate-secured transactions, excluding 
transactions for acquisition, development, and construction of real 
estate, which mean, for purposes of this rule, loans secured by real 
estate made to finance (a) land development (i.e., the process of 
improving land--laying sewers, water pipes, etc.) preparatory to 
erecting new structures, (b) the on-site construction of industrial, 
commercial, residential, or farm buildings (including 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), (c) loans secured by vacant land, except land 
known to be used or useable for agricultural purposes, such as crop and 
livestock production, (d) loans secured by real estate the proceeds of 
which are to be used to acquire and improve developed and undeveloped 
property, and (e) 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 temporary provision allowing regulated institutions to defer 
appraisals or evaluations for covered transactions will expire on 
December 31, 2020, unless extended by the agencies. As with the interim 
final rule, this final rule does not revise any of the existing 
appraisal exceptions or any other requirements with respect to the 
performance of evaluations. The agencies expect all appraisals, 
including deferred appraisals, to comply with USPAP, as issued by the 
Appraisal Standards Board of the Appraisal Foundation.

V. Administrative Law Matters

A. Administrative Procedure Act

    The Administrative Procedure Act (APA) generally requires that a 
final rule be published in the Federal Register no less than 30 days 
before its effective date except for (1) substantive rules, which grant 
or recognize an exemption or relieve a restriction; (2) interpretative 
rules and statements of policy; or (3) as otherwise provided by the 
agency for good cause.\26\ Because the final rule relieves a 
restriction, the final rule is exempt from the APA's delayed effective 
date requirement.\27\ Additionally, the agencies find good cause to 
publish the final rule with an

[[Page 65670]]

immediate effective date. The agencies believe that the public interest 
is best served by implementing the final rule as soon as possible. As 
discussed above, recent events have suddenly and significantly affected 
global economic activity, increasing businesses' and households' need 
to have timely access to liquidity from real estate equity. In 
addition, the spread of COVID-19 has greatly increased the difficulty 
of performing real estate appraisals and evaluations in a timely 
manner. The relief provided by the final rule will continue to allow 
regulated institutions to better focus on supporting lending to 
creditworthy households and businesses in light of recent strains on 
the U.S. economy as a result of COVID-19, while reaffirming the safety 
and soundness principle that valuation of collateral is an essential 
part of the lending decision. Finally, the agencies believe that 
implementing the final rule as soon as possible, with its clarifying 
language, is consistent with the agencies' intent to continue to grant 
expedited relief to the regulated entities. Therefore, the final rule 
will become effective October 16, 2020 through December 31, 2020.
---------------------------------------------------------------------------

    \26\ 5 U.S.C. 553(d).
    \27\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

B. Congressional Review Act

    For purposes of Congressional Review Act, the Office of Management 
and Budget (OMB) makes a determination as to whether a final rule 
constitutes a ``major'' rule.\28\ If a rule is deemed a ``major rule'' 
by the OMB, the Congressional Review Act generally provides that the 
rule may not take effect until at least 60 days following its 
publication.\29\
---------------------------------------------------------------------------

    \28\ 5 U.S.C. 801 et seq.
    \29\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------

    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in (A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions; or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\30\
---------------------------------------------------------------------------

    \30\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    As required by the Congressional Review Act, the agencies will 
submit the final rule and other appropriate reports to Congress and the 
Government Accountability Office for review.

C. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 \31\ (PRA), the agencies may not conduct or sponsor, and a 
respondent is not required to respond to, an information collection 
unless it displays a currently valid OMB control number. The agencies 
have reviewed this final rule and determined that it would not 
introduce any new or revise any collection of information pursuant to 
the PRA. Therefore, no submissions will be made to OMB for review.
---------------------------------------------------------------------------

    \31\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency to consider 
whether the rules it proposes will have a significant economic impact 
on a substantial number of small entities. The RFA applies only to 
rules for which an agency publishes a general notice of proposed 
rulemaking pursuant to 5 U.S.C. 553(b). Since the agencies were not 
required to issue a general notice of proposed rulemaking associated 
with the interim final rule or this final rule, no RFA is required. 
Accordingly, the agencies have concluded that the RFA's requirements 
relating to initial and final regulatory flexibility analysis do not 
apply.

E. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\32\ in determining the effective 
date and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements on 
insured depository institutions (IDIs), each Federal banking agency 
must consider, consistent with the principle of safety and soundness 
and the public interest, any administrative burdens that such 
regulations would place on depository institutions, including small 
depository institutions, and customers of depository institutions, as 
well as the benefits of such regulations. In addition, section 302(b) 
of RCDRIA requires new regulations and amendments to regulations that 
impose additional reporting, disclosure, or other new requirements on 
IDIs generally to take effect on the first day of a calendar quarter 
that begins on or after the date on which the regulations are published 
in final form.\33\ Each Federal banking agency has determined that the 
final rule would not impose any additional reporting, disclosure, or 
other new requirements on IDIs, and thus the requirements of the RCDRIA 
do not apply.
---------------------------------------------------------------------------

    \32\ 12 U.S.C. 4802(a).
    \33\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

F. Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \34\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The agencies have sought to present 
the final rule in a simple and straightforward manner and did not 
receive any comments on the use of plain language.
---------------------------------------------------------------------------

    \34\ 12 U.S.C. 4809.
---------------------------------------------------------------------------

G. OCC Unfunded Mandates Reform Act of 1995 Determination

    Under the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531 et seq., the OCC prepares a budgetary impact statement before 
promulgating a rule that includes a Federal mandate that may result in 
the expenditure by State, local, and tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. However, the UMRA does not apply to final rules for which a 
general notice of proposed rulemaking was not published.\35\ Therefore, 
because the OCC found good cause to dispense with notice and comment 
for the interim final rule, the OCC has not prepared an economic 
analysis of the final rule under the UMRA.
---------------------------------------------------------------------------

    \35\ See 2 U.S.C. 1532(a).
---------------------------------------------------------------------------

List of Subjects

12 CFR Part 34

    Appraisal, Appraiser, Banks, banking, Consumer protection, Credit, 
Mortgages, National banks, Reporting and recordkeeping requirements, 
Savings associations, Truth in lending.

12 CFR Part 225

    Administrative practice and procedure, Banks, banking, Federal 
Reserve System, Capital planning, Holding companies, Reporting and 
recordkeeping requirements, Securities, Stress testing.

12 CFR Part 323

    Banks, banking, Mortgages, Reporting and recordkeeping 
requirements, Savings associations.

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the joint preamble, the OCC amends 
part 34 of

[[Page 65671]]

chapter I of title 12 of the Code of Federal Regulations as follows:

PART 34--REAL ESTATE LENDING AND APPRAISALS

0
1. The authority citation for part 34 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463, 
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and 
5412(b)(2)(B) and 15 U.S.C. 1639h.


0
2. Section 34.43 is amended by revising paragraph (f) to read as 
follows:


Sec.  34.43  Appraisals required; transactions requiring a State 
certified or 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.

Federal Reserve Board

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board amends 
part 225 of chapter II of title 12 of the Code of Federal Regulations 
as follows:

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL 
(REGULATION Y)

0
3. The authority citation for part 225 continues to read as follows:

    Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3906, 
3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.


0
4. Section 225.63 is amended by revising paragraph (f) to read as 
follows:


Sec.  225.63  Appraisals required; transactions requiring a State 
certified or 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.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the joint preamble, the FDIC amends 
part 323 of chapter III of title 12 of the Code of Federal Regulations 
as follows:

PART 323--APPRAISALS

0
5. The authority citation for part 323 continues to read as follows:

    Authority:  12 U.S.C. 1818, 1819(a) (``Seventh'' and ``Tenth''), 
1831p-1 and 3331 et seq.


0
6. Section 323.3 is amended by revising paragraph (g) to read as 
follows:


Sec.  323.3   Appraisals required; transactions requiring a State 
certified or licensed appraiser.

* * * * *
    (g) 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 
(g)(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 
(g)(2)(i) through (iv) of this section. The term ``construction'' as 
used in this paragraph (g)(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 (g)(1) of this section:

[[Page 65672]]

    (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 (g)(2) of this section; and
    (B) Are secured by real estate.
    (3) Sunset. The appraisal and evaluation deferrals authorized by 
this paragraph (g) will expire for transactions closing after December 
31, 2020.

Brian P. Brooks
Acting Comptroller of the Currency Office of the Comptroller of the 
Currency Board of Governors of the Federal Reserve System.
Ann E. Misback,
Secretary of the Board.
    Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on or about September 15, 2020.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2020-21563 Filed 10-15-20; 8:45 am]
BILLING CODE 4810-33-P 6210-01-P 6714-01-P