NCUA appraisals rule grants “appropriate regulatory flexibility’

June 3, 2020

CUNA wrote in support of NCUA’s interim final rule (IFR) on real estate appraisals Thursday, saying it minimizes instances of borrowers experiencing delays in obtaining funds needed to meet immediate and near-term financial needs. NCUA issued the rule at its April meeting.

“Given the unprecedented nature of the current pandemic, we believe appropriate regulatory flexibility is necessary. As such, we support the temporary nature of this IFR,” the letter reads. “We believe it is appropriate that, under the IFR, credit unions that defer receipt of an appraisal or written estimate of market value will still be expected to conduct their lending activity consistent with safe and sound underwriting principles.”

Specifically, the rule allows a credit union to temporarily defer certain appraisals and evaluations for up to 120 days when other alternatives are not available and when the appraisal or evaluation would delay the closing of the residential or commercial real estate loan transaction.

It covers all real estate related transactions except those involving acquisition, development, and construction, and is effective through Dec. 31.

CUNA also requested NCUA provide clear guidance to address instances where a final valuation differs from the initial assessment.

“In such cases, the NCUA should not require the credit union to take any action pertaining to the borrower and the loan at issue. Such an approach makes the most sense from a logistical standpoint and also reduces instances of confusion among members, who could otherwise learn they must pay more  toward a finalized loan following a deferred appraisal,” the letter reads.