Agencies Issue Final Rules on Appraisals, LCR Relief

The federal banking agencies today finalized two rules intended to provide relief for financial institutions as a result of actions taken to aid in the coronavirus response. Both rules are substantively similar to interim final rules issued earlier this year.

The agencies issued a final rule, effective upon publication in the Federal Register, allowing financial institutions to temporarily defer appraisals and evaluations for residential or commercial real estate transactions for up to 120 days during the COVID-19 national emergency. This temporary relief will expire on Dec. 31, 2020. The rule does not apply to real estate acquisition, development and construction loan transactions and the final rule includes clarification of which loans fall under that category.

The agencies also finalized a rule intended to facilitate banks’ participation in the Paycheck Protection Program Liquidity Facility and the Money Market Mutual Fund Liquidity Facility by allowing them to neutralize the effects of their participation for purposes of the liquidity coverage ratio. Under the existing liquidity coverage ratio rule, banks are required to hold a buffer of high-quality liquid assets to meet short-term liquidity needs. This action by the agencies effectively exempts MMLF or PPPLF funding from the LCR calculation. The rule takes effect 60 days after publication in the Federal Register.