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COVID-19 Update: Banking Agencies Issue Temporary Deferral of Appraisals and Evaluations for Real Estate Transactions

On April 14, 2020, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued an interim final rule to temporarily defer real estate appraisals and evaluations under interagency appraisal rules.1  The interim final rule provides a 120-day deferral of appraisal and evaluation requirements for all transactions secured by commercial or residential real estate during the COVID-19 pandemic (which for purposes of the interim final rule extends to December 31, 2020, unless extended by the federal banking agencies), other than transactions for acquisition, development, and construction of real estate.  It does not revise any of the existing appraisal exceptions or any other requirements with respect to the performance of evaluations.  Under the interim final rule, regulated institutions may close a real estate loan without a contemporaneous appraisal or evaluation, subject to the requirement that they obtain appraisals or evaluations within a grace period of 120 days after the closing of the transaction.  Notwithstanding the interim final rule, the federal banking agencies expect institutions to use best efforts and available information to develop a credible, well-informed estimate of the collateral value of the subject property before the loan closing, and otherwise underwrite loans consistent with the principles contained in interagency standards.  The deferral will expire on December 31, 2020, unless extended by the federal banking agencies.

In conjunction with the interim final rule, the federal banking agencies, together with the National Credit Union Administration and the Consumer Financial Protection Bureau, issued an interagency statement that outlines existing flexibilities in industry appraisal standards and federal appraisal regulations.2  It also summarizes temporary changes to Fannie Mae and Freddie Mac appraisal standards that can assist lenders in light of the COVID-19 pandemic.


1       Interim Final Rule, Real Estate Appraisals (Apr. 13, 2020), available here.  

2      Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus (Apr. 14, 2020), available here

© Copyright 2020 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume X, Number 108



About this Author

Steven M. Herman, Cadwalader, Joint Ventures Lawyer, mortgage securitizations Attorney

Steven Herman concentrates his practice in the areas of real estate finance, development, joint ventures, acquisitions, dispositions, commercial leasing, restructurings, workouts, and commercial mortgage securitizations. His work ranges from single- and multiple-asset negotiated and auction transactions to highly structured transactions that span all segments of the marketplace, including office, hotel, retail, multifamily, mixed-use healthcare, and industrial facilities. Steve's clients include investment banks, commercial banks, developers, investors, partners, lenders...

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Scott Cammarn Financial Law Attorney Cadwalader Law Firm

Scott Cammarn has 28 years of experience in the banking industry and his legal career has spanned all areas of banking compliance and finance law. His practice focuses on regulatory matters, mergers & acquisitions, legislation, transactions, and training. He represents a number of national and international financial institutions and has practiced before the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, and numerous state banking departments.

Mark Chorazak, Cadwalader Law Firm, New York, Corporate and Finance Law Attorney

Mark Chorazak is a partner in the Financial Services Group. Mark represents financial institutions on a wide range of bank regulatory, transactional and compliance matters. He regularly counsels banks, thrifts, investors and other financial services firms on strategic matters and compliance issues arising under the Bank Holding Company Act, the Dodd-Frank Act and other key U.S. banking laws. Among other areas, his practice encompasses Volcker Rule compliance, fintech and financial innovation issues, authority and control matters, anti-money laundering counseling,...

Nicholas E. Brandfon, Cadwalader, Corporate Finance Lawyer, Mezzanine Loans Attorney

Nick Brandfon's practice is concentrated in the areas of real estate and corporate finance. He represents clients in a variety of transactions, including the origination of mortgage and mezzanine loans, syndication, loan restructuring and bankruptcy-related matters. Nick's experience spans many segments of the marketplace, such as office, hotel, condominium and retail properties.

He received his J.D. from Northwestern University School of Law and his B.A. from Williams College. Nick is admitted to practice in the State of New York.

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