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Appraisals & AVMs

Regulators Waive Appraisal Requirements in Hurricane Zones to Facilitate the Recovery Efforts

By Brian Collins

WASHINGTON -- Federal banking regulators have waived appraisal requirements in the disaster areas hit by Hurricanes Katrina and Rita to facilitate reconstruction and recovery efforts over the next three years.

Banks still need to estimate the value of residential or commercial property transactions, but they don't need an appraiser or a formal appraisal to do that, one regulator said.

As the recovery gains traction and the pace of real estate transactions accelerates, the regulators don't want transactions held up unnecessarily because a bank can't find an appraiser.

"Therefore the agencies have determined that the disruption may impede institutions from making loans and engaging in other transactions that would aid in the reconstruction and rehabilitation of the affected areas," according to a joint agency statement.

The Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and National Credit Union Administration issued the waivers.

The waivers apply to properties only in Katrina and Rita disaster areas because of the magnitude of the destruction. The regulators do not routinely waiver appraisal requirement in disaster areas.

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