OCC Bulletin 2017-42| October 17, 2017
Flood Disaster: Temporary Exceptions to FIRREA Appraisal Requirements in Areas Affected by Severe Storms and Flooding in Florida, Georgia, Puerto Rico, Texas, and the U.S. Virgin Islands
Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies of Foreign Banks; Department and Division Heads; All Examining Personnel; and Other Interested Parties
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration (collectively, the agencies) are exempting real estate-related transactions from appraisal requirements in major disaster areas as declared by President Trump. The exemptions will be in effect for a three-year period from the date of declaration. Included are parts of Florida, Georgia, Puerto Rico, Texas, and the U.S. Virgin Islands. The agencies are providing relief from appraisal requirements for transactions involving real property under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and its implementing regulations. The agencies are jointly publishing the attached news release and order in the Federal Register.
Note for Community Banks
This guidance applies to all national banks and federal savings associations (collectively, banks) with loans secured by real estate located in an affected area.
Section 2 of the Depository Institutions Disaster Relief Act of 1992 authorizes the agencies to make exceptions to statutory and regulatory requirements related to appraisals for certain transactions. The exceptions are available for transactions that involve real property in major disaster areas if the agencies determine that the exceptions would facilitate recovery from the disasters and would be consistent with safety and soundness. The agencies have made these determinations and grant exceptions to the appraisal requirements, provided certain criteria are met.
To qualify for this exception, banks should maintain appropriate documentation of the following:
- The transaction involves real property located in an area declared a major disaster.
- There is a binding commitment to fund the transaction entered into on or after
- August 25, 2017, but no later than August 24, 2020, for areas declared a major disaster in Texas after Hurricane Harvey.
- September 7, 2017, but no later than September 6, 2020, for areas declared a major disaster in the U.S. Virgin Islands after Hurricane Irma.
- September 10, 2017, but no later than September 9, 2020, for areas declared a major disaster in Florida and Puerto Rico after Hurricane Irma.
- September 15, 2017, but no later than September 14, 2020, for areas declared a major disaster in Georgia after Hurricane Irma.
- September 20, 2017, but no later than September 19, 2020, for areas declared a major disaster in Puerto Rico after Hurricane Maria.
- September 21, 2017, but no later than September 20, 2020, for areas declared a major disaster in the U.S. Virgin Islands after Hurricane Maria.
- The value of the real property supports the bank’s decision to enter into the transaction. In addition, the transaction continues to be subject to review by bank management and by the agencies in the course of examinations of the bank.
Banks are encouraged to refer to OCC Bulletin 2010-42, “Sound Practices for Appraisals and Evaluations: Interagency Appraisal and Evaluation Guidelines.” Bulletin 2010-42 addresses prudent standards for preparing collateral valuations when a property transaction qualifies for an exception.
Please contact Kevin Lawton, Appraisal Specialist in the Credit Risk Division, at (202) 649-6770.
Grace E. Dailey
Senior Deputy Comptroller for Bank Supervision Policy
and Chief National Bank Examiner