Agencies Adopt Final Rule on Certain Real Estate Transactions for Financial Institutions and Consumers Affected by the Coronavirus

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1 The coronavirus disease 2019 outbreak was

declared a national emergency under Proclamation

No. 9994, 85 FR 15337 (Mar. 18, 2020).

2 85 FR 21312.

3 12 U.S.C. 3331 et seq.; Public Law 101–73, 103

Stat. 183 (1989).

same email address or call the telephone

number in appendix A to 10 CFR part

73. For questions or concerns on

submitting these advance notifications

to the NRC, please contact the Office of

International Programs at 301–287–

9056.

*

*

*

*

*

PART 140—FINANCIAL PROTECTION

REQUIREMENTS AND INDEMNITY

AGREEMENTS

■82. The authority citation for part 140

continues to read as follows:

Authority: Atomic Energy Act of 1954,

secs. 161, 170, 223, 234 (42 U.S.C. 2201,

2210, 2273, 2282); Energy Reorganization Act

of 1974, secs. 201, 202 (42 U.S.C. 5841,

5842); 44 U.S.C. 3504 note.

§ 140.9a

[Amended]

■83. In § 140.9a(b), add ‘‘140.8,’’ in

numerical order.

Dated: September 21, 2020.

For the Nuclear Regulatory Commission.

Cindy K. Bladey,

Chief, Regulatory Analysis and Rulemaking

Support Branch, Division of Rulemaking,

Environmental, and Financial Support, Office

of Nuclear Material Safety and Safeguards.

[FR Doc. 2020–21148 Filed 10–15–20; 8:45 am]

BILLING CODE 7590–01–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 34

[Docket No. OCC–2020–0014]

RIN 1557–AE86

FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Docket No. R–1713]

RIN 7100–AF87

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 323

RIN 3064–AF48

Real Estate Appraisals

AGENCY: The Office of the Comptroller

of the Currency, Treasury (OCC); the

Board of Governors of the Federal

Reserve System (Board); and the Federal

Deposit Insurance Corporation (FDIC).

ACTION: Final rule

RIN 1557–AE86

FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Docket No. R–1713]

RIN 7100–AF87

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 323

RIN 3064–AF48

Real Estate Appraisals

AGENCY: The Office of the Comptroller

of the Currency, Treasury (OCC); the

Board of Governors of the Federal

Reserve System (Board); and the Federal

Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

SUMMARY: The OCC, Board, and FDIC

(collectively, the agencies) are adopting

as final the interim final rule published

by the agencies on April 17, 2020,

making temporary amendments to the

agencies’ regulations requiring

appraisals for certain real estate-related

transactions. The final rule adopts the

deferral of the requirement to obtain an

appraisal or evaluation for up to 120

days following the closing of certain

residential and commercial real estate

transactions, excluding transactions for

acquisition, development, and

construction of real estate. Regulated

institutions should make best efforts to

obtain a credible estimate of the value

of real property collateral before closing

the loan and otherwise underwrite loans

consistent with the principles in the

agencies’ Standards for Safety and

Soundness and Real Estate Lending

Standards. The agencies’ final rule

allows regulated institutions to

expeditiously extend liquidity to

creditworthy households and businesses

in light of recent strains on the U.S.

economy as a result of the coronavirus

disease 2019 (COVID event). The final

rule adopts the interim final rule with

one revision in response to comments

received by the agencies on the interim

final rule.

DATES: The final rule is effective

October 16, 2020 through December 31,

2020.

FOR FURTHER INFORMATION CONTACT:

OCC: G

ouseholds and businesses

in light of recent strains on the U.S.

economy as a result of the coronavirus

disease 2019 (COVID event). The final

rule adopts the interim final rule with

one revision in response to comments

received by the agencies on the interim

final rule.

DATES: The final rule is effective

October 16, 2020 through December 31,

2020.

FOR FURTHER INFORMATION CONTACT:

OCC: G. Kevin Lawton, Appraiser

(Real Estate Specialist), (202) 649–6670;

Mitchell Plave, Special Counsel, (202)

649–5490; or Joanne Phillips, Counsel,

Chief Counsel’s Office (202) 649–5500;

Office of the Comptroller of the

Currency, 400 7th Street SW,

Washington, DC 20219. For persons

who are deaf or hearing impaired, TTY

users may contact (202) 649–5597.

Board: Anna Lee Hewko, Associate

Director, (202) 530–6260; Teresa A.

Scott, Manager, Policy Development

Section, (202) 973–6114; Carmen Holly,

Lead Financial Institution Policy

Analyst, (202) 973–6122; Devyn

Jeffereis, Senior Financial Institution

Policy Analyst, (202) 365–2467,

Division of Supervision and Regulation;

Laurie Schaffer, Deputy General

Counsel, (202) 452–2272; Derald Seid,

Senior Counsel, (202) 452–2246; Trevor

Feigleson, Counsel, (202) 452–3274;

David Imhoff, Attorney, (202) 452–2249,

Legal Division, Board of Governors of

the Federal Reserve System, 20th and C

Streets NW, Washington, DC 20551. For

the hearing impaired only,

Telecommunications Device for the Deaf

(TDD) users may contact (202) 263–

4869.

FDIC: Beverlea S. Gardner, Senior

Examination Specialist, Division of Risk

Management and Supervision, (202)

898–3640, BGardner@FDIC.gov; Mark

Mellon, Counsel, Legal Division, (202)

898–3884; or, Lauren Whitaker, Senior

Attorney, Legal Division, (202) 898–

3872, Federal Deposit Insurance

Corporation, 550 17th Street NW,

Washington, DC 20429. For the hearing

impaired only, TDD users may contact

everlea S. Gardner, Senior

Examination Specialist, Division of Risk

Management and Supervision, (202)

898–3640, BGardner@FDIC.gov; Mark

Mellon, Counsel, Legal Division, (202)

898–3884; or, Lauren Whitaker, Senior

Attorney, Legal Division, (202) 898–

3872, Federal Deposit Insurance

Corporation, 550 17th Street NW,

Washington, DC 20429. For the hearing

impaired only, TDD users may contact

(202) 925–4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

II. Background

III. Overview of the Interim Final Rule and

Comments

A. Overview of the Interim Final Rule

B. Public Comments

IV. Summary of the Final Rule

V. Administrative Law Matters

A. Administrative Procedure Act

B. Congressional Review Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Riegle Community Development and

Regulatory Improvement Act of 1994

F. Use of Plain Language

G. OCC Unfunded Mandates Reform Act of

1995 Determination

I. Introduction

Impact of the COVID event on

appraisals and evaluations. Due to the

impact of the COVID event 1 and the

need for businesses and individuals to

quickly access additional liquidity, the

agencies published an interim final rule

in the Federal Register on April 17,

2020 (interim final rule),2 that deferred

the requirement to obtain an appraisal

or evaluation for up to 120 days

following the closing of a transaction for

certain residential and commercial real

estate transactions, excluding

transactions for acquisition,

development, and construction of real

estate. The interim final rule allows

businesses and individuals to quickly

access liquidity from real estate equity

during the COVID event.

The agencies are adopting the interim

final rule as final, with one revision in

response to comments. The

amendments to the agencies’ appraisal

regulations allow for the deferral of

appraisals and evaluations for

qualifying transactions through

December 31, 2020, as detailed further

below.

II

es and individuals to quickly

access liquidity from real estate equity

during the COVID event.

The agencies are adopting the interim

final rule as final, with one revision in

response to comments. The

amendments to the agencies’ appraisal

regulations allow for the deferral of

appraisals and evaluations for

qualifying transactions through

December 31, 2020, as detailed further

below.

II. Background

Title XI of the Financial Institutions

Reform, Recovery, and Enforcement Act

of 1989 (Title XI) 3 directs each Federal

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

4 The term ‘‘Federal financial institutions

regulatory agencies’’ means the Board, the FDIC, the

OCC, the National Credit Union Administration,

and, formerly, the Office of Thrift Supervision. 12

U.S.C. 3350(6).

5 These federal financial and public policy

interests include those stemming from the federal

government’s roles as regulator and deposit insurer

of financial institutions that engage in real estate

lending and investment, guarantor or lender on

mortgage loans, and as a direct party in real estate-

related financial transactions. These interests have

been described in predecessor legislation and

accompanying Congressional reports. See Real

Estate Appraisal Reform Act of 1988, H.R. Rep. No.

100–1001, pt. 1, at 19 (1988); 133 Cong. Rec. 33047–

33048 (1987).

6 12 U.S.C. 3331.

7 12 U.S.C. 3339.

8 Id.

9 12 U.S.C. 3350(5). A real estate-related financial

transaction is defined as any transaction that

involves: (i) The sale, lease, purchase, investment

in or exchange of real property, including interests

in property, or financing thereof; (ii) the refinancing

of real property or interests in real property; and

33 Cong. Rec. 33047–

33048 (1987).

6 12 U.S.C. 3331.

7 12 U.S.C. 3339.

8 Id.

9 12 U.S.C. 3350(5). A real estate-related financial

transaction is defined as any transaction that

involves: (i) The sale, lease, purchase, investment

in or exchange of real property, including interests

in property, or financing thereof; (ii) the refinancing

of real property or interests in real property; and

(iii) the use of real property or interests in property

as security for a loan or investment, including

mortgage-backed securities.

10 12 U.S.C. 3350(4).

11 Real estate-related financial transactions that

the agencies have exempted from the appraisal

requirement are not federally related transactions

under the agencies’ appraisal regulations.

12 See OCC: 12 CFR 34.43(a); Board: 12 CFR

225.63(a); FDIC: 12 CFR 323.3(a). The agencies have

determined that these categories of transactions do

not require appraisals by state certified or state

licensed appraisers in order to protect federal

financial and public policy interests or to satisfy

principles of safe and sound banking.

13 See OCC: 12 CFR 34.43(b); Board: 12 CFR

225.63(b); and FDIC: 12 CFR 323.3(b). Evaluations

are required for exempt residential and commercial

loans below the dollar value thresholds for

requiring an appraisal; exempt business loans;

exempt subsequent transactions; and transactions

subject to the rural residential exemption.

14 The agencies have provided guidance on

appraisals and evaluations through the Interagency

Guidelines on Appraisals and Evaluations. See 75

FR 77450 (Dec. 10, 2010), available at https://

occ.gov/news-issuances/federal-register/2010/

75fr77450.pdf

or

requiring an appraisal; exempt business loans;

exempt subsequent transactions; and transactions

subject to the rural residential exemption.

14 The agencies have provided guidance on

appraisals and evaluations through the Interagency

Guidelines on Appraisals and Evaluations. See 75

FR 77450 (Dec. 10, 2010), available at https://

occ.gov/news-issuances/federal-register/2010/

75fr77450.pdf.

15 See OCC: 12 CFR 34.42(a), 34.44(b)&(e); Board:

12 CFR 225.62(a), 225.64(b)&(e); and FDIC: 12 CFR

323.2(a), 323.4(b)&(e) (requiring an appraisal to (1)

contain sufficient information and analysis to

support the institution’s decision to engage in the

transaction, and (2) be based on the definition of

market value in the regulation, which takes into

account a specified closing date for the transaction).

16 See 75 FR 77450 (Dec. 10, 2010), available at

https://occ.gov/news-issuances/federal-register/

2010/75fr77450.pdf.

17 OCC: 12 CFR part 30, appendix A; Board: 12

CFR part 208, appendix D–1; and FDIC: 12 CFR part

364, appendix A.

18 OCC: 12 CFR part 34, subpart D, appendix A;

Board: 12 CFR part 208, subpart E, appendix C; and

FDIC: 12 CFR part 365, subpart A, appendix A.

Financial institutions should have a program for

establishing the market value of real property to

comply with these real estate lending standards,

which require financial institutions to determine

the value used in loan-to-value calculations based

in part on a value set forth in an appraisal or an

evaluation.

19 See 12 U.S.C. 1831p-1

x C; and

FDIC: 12 CFR part 365, subpart A, appendix A.

Financial institutions should have a program for

establishing the market value of real property to

comply with these real estate lending standards,

which require financial institutions to determine

the value used in loan-to-value calculations based

in part on a value set forth in an appraisal or an

evaluation.

19 See 12 U.S.C. 1831p-1.

financial institutions regulatory agency

to publish appraisal regulations for

federally related transactions within its

jurisdiction.4 The purpose of Title XI is

to protect federal financial and public

policy interests 5 in real estate-related

transactions by requiring that real estate

appraisals used in connection with

federally related transactions (Title XI

appraisals) are performed in writing, in

accordance with uniform standards, by

individuals whose competency has been

demonstrated and whose professional

conduct will be subject to effective

supervision.6

Title XI directs the agencies to

prescribe appropriate standards for Title

XI appraisals under the agencies’

respective jurisdictions.7 At a

minimum, Title XI provides that a Title

XI appraisal must be: (1) Performed in

accordance with the Uniform Standards

of Professional Appraisal Practice

(USPAP); (2) a written appraisal, as

defined by Title XI; and (3) subject to

appropriate review for compliance with

USPAP.8 While appraisals ordinarily are

completed before a lender and borrower

close a real estate transaction, there is

no specific requirement in USPAP that

appraisals be completed at a specific

time relative to the closing of a

transaction.

All federally related transactions must

have Title XI appraisals

s

defined by Title XI; and (3) subject to

appropriate review for compliance with

USPAP.8 While appraisals ordinarily are

completed before a lender and borrower

close a real estate transaction, there is

no specific requirement in USPAP that

appraisals be completed at a specific

time relative to the closing of a

transaction.

All federally related transactions must

have Title XI appraisals. Title XI defines

a federally related transaction as a real

estate-related financial transaction 9 that

the agencies or a financial institution

regulated by the agencies engages in or

contracts for, that requires the services

of an appraiser.10 The agencies have

authority to determine those real estate-

related financial transactions that do not

require the services of an appraiser and

thus are not required to have Title XI

appraisals.11 The agencies have

exercised this authority by exempting

certain categories of real estate-related

financial transactions from the agencies’

appraisal requirements.12

The agencies have used their safety

and soundness authority to require

evaluations for a subset of transactions

for which an appraisal is not required.13

Under the appraisal regulations, for

these transactions, financial institutions

that are subject to the agencies’

appraisal regulations (regulated

institutions) must obtain an appropriate

evaluation of real property collateral

that is consistent with safe and sound

banking practices.14

Authority to defer appraisals and

evaluations. In general, the agencies

require that Title XI appraisals for

federally related transactions occur

prior to the closing of a federally related

transaction.15 The Interagency

Guidelines on Appraisals and

Evaluations provide similar guidance

about evaluations.16 Under the interim

final rule, deferrals of appraisals and

evaluations allow for expeditious access

to credit. The agencies authorized the

deferrals, which are temporary, in

response to the COVID event

related transactions occur

prior to the closing of a federally related

transaction.15 The Interagency

Guidelines on Appraisals and

Evaluations provide similar guidance

about evaluations.16 Under the interim

final rule, deferrals of appraisals and

evaluations allow for expeditious access

to credit. The agencies authorized the

deferrals, which are temporary, in

response to the COVID event. Regulated

institutions that defer receipt of an

appraisal or evaluation are still expected

to conduct their lending activity

consistent with the underwriting

principles in the agencies’ Standards for

Safety and Soundness 17 and Real Estate

Lending Standards 18 that focus on the

ability of a borrower to repay a loan and

other relevant laws and regulations.

These deferrals are not an exercise of

the agencies’ waiver authority, because

appraisals and evaluations are being

deferred, not waived. The deferrals also

are not a waiver of USPAP

requirements, given that (1) USPAP

does not address the completion of an

appraisal assignment with the timing of

a lending decision; and (2) the deferred

appraisal must be conducted in

compliance with USPAP.

The deferral of evaluations reflects the

same considerations relating to the

impact of the COVID event as the

deferral of appraisals. The agencies

require evaluations for certain exempt

transactions as a matter of safety and

soundness. Evaluations do not need to

comply with USPAP but must be

sufficiently robust to support a

valuation conclusion. An evaluation can

be less complex than an appraisal and

usually takes less time to complete than

an appraisal, and commonly involves a

physical property inspection. For these

reasons, the agencies also are using their

safety and soundness authority 19 to

allow for deferral of evaluations

s do not need to

comply with USPAP but must be

sufficiently robust to support a

valuation conclusion. An evaluation can

be less complex than an appraisal and

usually takes less time to complete than

an appraisal, and commonly involves a

physical property inspection. For these

reasons, the agencies also are using their

safety and soundness authority 19 to

allow for deferral of evaluations.

By the end of the 120-day appraisal

and evaluation deferral period provided

by the final rule, regulated institutions

must obtain appraisals or evaluations

that are consistent with safe and sound

banking practices, as required by the

agencies’ appraisal regulations.

III. Overview of the Interim Final Rule

and Comments

A. Overview of the Interim Final Rule

The interim final rule allows a

temporary deferral of the requirements

for appraisals and evaluations under the

agencies’ appraisal regulations. The

deferrals apply to both residential and

commercial real estate-related financial

transactions, excluding transactions for

acquisition, development, and

construction of real estate. The agencies

are excluding these transactions because

these loans present heightened risks not

associated with the financing of existing

real estate.

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20 See OCC: 12 CFR 3.32(g); Board: 12 CFR

217.32(g); and FDIC: 12 CFR 324.32(g).

21 See https://www.ffiec.gov/pdf/FFIEC_forms/

FFIEC031_FFIEC041_202006_i.pdf. See also https://

www.ffiec.gov/pdf/FFIEC_forms/FFIEC051_202006_

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

20 See OCC: 12 CFR 3.32(g); Board: 12 CFR

217.32(g); and FDIC: 12 CFR 324.32(g).

21 See https://www.ffiec.gov/pdf/FFIEC_forms/

FFIEC031_FFIEC041_202006_i.pdf. See also https://

www.ffiec.gov/pdf/FFIEC_forms/FFIEC051_202006_

i.pdf.

Under the interim final rule, regulated

institutions may close a real estate loan

without a contemporaneous appraisal or

evaluation, subject to a requirement that

the institution obtain the appraisal or

evaluation, as would have been required

under the appraisal regulations without

the deferral, within a period of 120 days

after the closing of the transaction.

While appraisals and evaluations can be

deferred, the agencies expect regulated

institutions to use best efforts and

available information to develop a well-

informed estimate of the collateral value

of the subject property. For purposes of

the risk-weighting of residential

mortgage exposures, an institution’s

prudent underwriting estimation of the

collateral value of the subject property

will be considered to meet the agencies’

appraisal and evaluation requirements

during the deferral period.20 In addition,

the agencies continue to expect

regulated institutions to adhere to

internal underwriting standards for

assessing borrowers’ creditworthiness

and repayment capacity, and to develop

procedures for estimating the

collateral’s value for the purposes of

extending or refinancing credit.

Transactions for acquisition,

development, and construction of real

estate are excluded because repayment

of those transactions is generally

dependent on the completion or sale of

the property being held as collateral as

opposed to repayment generated by

existing collateral or the borrower

ocedures for estimating the

collateral’s value for the purposes of

extending or refinancing credit.

Transactions for acquisition,

development, and construction of real

estate are excluded because repayment

of those transactions is generally

dependent on the completion or sale of

the property being held as collateral as

opposed to repayment generated by

existing collateral or the borrower. The

agencies also expect regulated

institutions to develop an appropriate

risk mitigation strategy if the appraisal

or evaluation ultimately reveals a

market value significantly lower than

the expected market value. A regulated

institution’s risk mitigation strategy

should consider all risks that affect the

institution’s safety and soundness,

balanced with mitigation of financial

harm to COVID event affected

borrowers. The temporary provision

permitting regulated institutions to

defer an appraisal or evaluation for

eligible transactions will expire on

December 31, 2020 (a transaction closed

on or before December 31, 2020, is

eligible for a deferral), unless extended

by the agencies. The agencies believe

that the limited timeframe for the

deferral strikes the right balance

between safety and soundness and the

need for immediate relief due to the

COVID event.

B. Public Comments

The agencies collectively received

eleven comments from trade

associations representing banks,

appraisers, and from individuals in

response to the interim final rule. The

majority of commenters supported the

agencies’ action and stated that

appraisal and evaluation deferrals

would be helpful to businesses and

consumers during the COVID event.

Commenters also requested clarification

of certain aspects of the interim final

rule. Two commenters requested that

the agencies add a definition of

acquisition, development, and

construction transactions for purposes

of this rule and that the agencies clarify

risk management practices after the

deferral period

ferrals

would be helpful to businesses and

consumers during the COVID event.

Commenters also requested clarification

of certain aspects of the interim final

rule. Two commenters requested that

the agencies add a definition of

acquisition, development, and

construction transactions for purposes

of this rule and that the agencies clarify

risk management practices after the

deferral period. Two commenters asked

the agencies to reconsider the interim

final rule, mainly over concern that

delayed appraisals and evaluations

might not support the related credit

extensions and the loans would give rise

to excessive leverage. One commenter

asked the agencies to describe how

appraisers should date deferred

appraisals. One commenter asked the

agencies to make the deferral permanent

as a way to address the ongoing problem

of appraiser shortages in rural areas.

Commenters in support of the interim

final rule stated that it would provide

households and businesses with needed

relief during the COVID event. Several

commenters stated the interim final rule

would provide consumers with quick

access to liquidity from real estate

equity. Another commenter stated that

flexibilities shown by the agencies in

response to the COVID event, including

the temporary amendment implemented

by the interim final rule, would help

community banks serve their clients and

would not compromise safety and

soundness or credit quality. Another

commenter indicated the interim final

rule would alleviate a bottleneck or

freeze of appraisal and evaluation

services in certain geographical areas.

Another commenter stated that the

interim final rule would allow banks to

complete real estate transactions within

the normal timeframes. A commenter

stated that banks would use the deferral

prudently, for creditworthy borrowers.

Commenters also expressed support for

the agencies making the interim final

rule effective immediately

al and evaluation

services in certain geographical areas.

Another commenter stated that the

interim final rule would allow banks to

complete real estate transactions within

the normal timeframes. A commenter

stated that banks would use the deferral

prudently, for creditworthy borrowers.

Commenters also expressed support for

the agencies making the interim final

rule effective immediately.

Commenters who opposed the interim

final rule expressed concern that the

deferred appraisals and evaluations

might not support the loan amount and

that after the 120-day deferral period,

loans would give rise to excessive

leverage. Another expressed concern

about sudden defaults and potential

miscalculation of collateral values.

Commenters also were concerned about

professionalism in valuations, stating

that insured professionals should be

involved from the outset of real estate

lending. Commenters also stated that a

well-informed estimate of collateral

value, as required by the interim final

rule, may be difficult to develop for

complex commercial real estate

transactions.

Definition of Acquisition, Development,

and Construction

Two commenters requested the

agencies provide clarity about the scope

of ‘‘acquisition, development, and

construction’’ transactions that are

excluded from the interim final rule.

One commenter stated there is

confusion in the industry about the

meaning of the term. Another

commenter asked the agencies to

confirm that the definition found in the

instructions to the Federal Financial

Institutions Examination Council

(FFIEC) Schedule RC–C, Part I, ‘‘Loan

and Leases,’’ 21 of the Consolidated

Reports of Condition and Income (Call

Report), for the three versions of the Call

Report (FFIEC 031, FFIEC 041, and

FFIEC 051), is the definition that should

apply to real estate appraisals for

purposes of ‘‘acquisition, development,

and construction’’ in the interim final

rule

al

Institutions Examination Council

(FFIEC) Schedule RC–C, Part I, ‘‘Loan

and Leases,’’ 21 of the Consolidated

Reports of Condition and Income (Call

Report), for the three versions of the Call

Report (FFIEC 031, FFIEC 041, and

FFIEC 051), is the definition that should

apply to real estate appraisals for

purposes of ‘‘acquisition, development,

and construction’’ in the interim final

rule.

After consideration of these

comments, the agencies are clarifying

that transactions for the ‘‘acquisition,

development, and construction’’ of real

estate excluded from the 120-day

deferral period mean, for purposes of

this rule, those loans described in the

Instructions for Schedule RC–C, ‘‘Loans

and Lease Financing Receivables,’’ Part

I, ‘‘Loans and Leases,’’ item 1.a,

‘‘Construction, land development, and

other land loans,’’ of the Call Report.

The instructions for Schedule RC–C

describe such loans as loans secured by

real estate made to finance (a) land

development (i.e., the process of

improving land—laying sewers, water

pipes, etc.) preparatory to erecting new

structures, (b) the on-site construction of

industrial, commercial, residential, or

farm buildings (including not only

construction of new structures, but also

additions or alterations to existing

structures and the demolition of existing

structures to make way for new

structures), (c) loans secured by vacant

land, except land known to be used or

useable for agricultural purposes, such

as crop and livestock production, (d)

loans secured by real estate the proceeds

of which are to be used to acquire and

improve developed and undeveloped

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d by vacant

land, except land known to be used or

useable for agricultural purposes, such

as crop and livestock production, (d)

loans secured by real estate the proceeds

of which are to be used to acquire and

improve developed and undeveloped

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

22 See Interagency Statement on Appraisals and

Evaluations for Real Estate Related Transactions

Affected by the Coronavirus (Apr. 14, 2020),

available at https://www.occ.gov/news-issuances/

news-releases/2020/nr-ia-2020-54.html.

23 Joint Statement on Additional Loan

Accommodations Related to COVID–19, OCC

Bulletin 2020–72; Board SR Letter 20–18; FDIC

Financial Institution Letter FIL–74–2020.

24 The FFIEC is composed of the following: a

member of the Board, appointed by the Chairman

of the Board; the Chairman of the FDIC; the

Chairman of the National Credit Union

Administration; the Comptroller of the OCC; the

Director of the Bureau of Consumer Financial

Protection; and, the Chairman of the State Liaison

Committee.

25 Press Release: Interagency Statement on

Appraisals and Evaluations for Real Estate Related

Transactions Affected by the Coronavirus (Apr. 14,

2020).

26 5 U.S.C. 553(d).

27 5 U.S.C. 553(d)(1).

property, and (e) loans made under Title

I or Title X of the National Housing Act

that conform to the definition of

construction stated above and that are

secured by real estate. This is consistent

with the agencies’ intent in excluding

certain ‘‘acquisition, development, and

construction’’ transactions from the 120-

day deferral period, and reflects

institutions’ routine reporting of such

assets for purposes of the Call Report

I or Title X of the National Housing Act

that conform to the definition of

construction stated above and that are

secured by real estate. This is consistent

with the agencies’ intent in excluding

certain ‘‘acquisition, development, and

construction’’ transactions from the 120-

day deferral period, and reflects

institutions’ routine reporting of such

assets for purposes of the Call Report.

Managing Loans Using COVID Event

Flexibilities

One commenter requested that the

agencies clarify post-crisis expectations

for managing loans for which regulatory

flexibilities have been used. Generally,

the agencies expect that, after the

COVID event, banks should continue to

adhere to practices consistent with the

established safety and soundness

standards and should refer to risk

management guidance for managing

loans that have been issued during the

COVID event. Existing flexibilities in

appraisal standards and the interagency

appraisal regulations are described in

the Interagency Statement on Appraisals

and Evaluations for Real Estate Related

Financial Transactions Affected by the

Coronavirus.22 Institutions should also

consider the Joint Statement on

Additional Loan Accommodations

Related to COVID–19 23 (Joint

Statement), issued by the FFIEC member

agencies.24 The Joint Statement

provides guidance on managing loans as

they approach the end of COVID event-

related accommodation periods. The

Joint Statement also provides guidance

on offering additional accommodations.

Commenters also requested that the

agencies provide a remedy for loans

with deferred appraisals when the

appraised value is lower than expected.

The agencies did not prescribe methods

or documentation standards for

valuations estimated during the deferral

period, but prudent institutions should

retain information that was used to

support a best estimate

ffering additional accommodations.

Commenters also requested that the

agencies provide a remedy for loans

with deferred appraisals when the

appraised value is lower than expected.

The agencies did not prescribe methods

or documentation standards for

valuations estimated during the deferral

period, but prudent institutions should

retain information that was used to

support a best estimate. Institutions

should continue to develop a loan-to-

value estimate in accordance with real

estate lending standards and overall

standards for safety and soundness.

Some examples of information that may

help to develop an informed estimate

are existing appraisals, tax assessed

values, comparable sales, and lender

estimates. As stated in the interim final

rule, the agencies expect each

institution to develop an appropriate

risk mitigation strategy if the appraisal

or evaluation ultimately determines a

market value for a property that is

significantly lower than expected when

the loan was made. Appropriate risk

mitigation strategies may vary based on

circumstances and borrower. The Joint

Statement clarifies that a reasonable

accommodation may not necessarily

result in an adverse risk rating solely

because of a decline in the value of

underlying collateral, provided that the

borrower has the ability to perform

according to the terms of the loan.

However, institutions should recognize

a heightened degree of risk if the

subsequently obtained appraisal or

evaluation ultimately reveals a market

value significantly lower than the

expected market value and take

appropriate action to mitigate the risk.

Other Expectations for Deferred

Appraisals

A commenter requested guidance on

what effective date appraisers should

use for appraisals that are deferred for

120 days. The agencies continue to

leave the effective dates for these

transactions to the discretion of the

bank as established by the scope of work

of the appraisal engagement

value and take

appropriate action to mitigate the risk.

Other Expectations for Deferred

Appraisals

A commenter requested guidance on

what effective date appraisers should

use for appraisals that are deferred for

120 days. The agencies continue to

leave the effective dates for these

transactions to the discretion of the

bank as established by the scope of work

of the appraisal engagement. Another

commenter suggested the agencies tailor

the interim final rule to different types

of real estate or based on the price of the

property. Another commenter requested

the agencies make the changes in the

interim final rule and the Interagency

Statement on Appraisals and

Evaluations for Real Estate Related

Transactions Affected by the

Coronavirus 25 permanent. The agencies

have no plans to extend or change the

interim final rule at this time but will

continue to consider flexibilities as

needed while supporting safe and sound

collateral valuation practices during and

after the COVID event.

IV. Summary of the Final Rule

For the reasons discussed above, the

agencies are adopting as final the

interim final rule with one revision,

which is the clarification of the meaning

of ‘‘acquisition, development, and

construction loans.’’ Accordingly, under

the final rule, regulated institutions may

defer required appraisals and

evaluations for up to 120 days for all

residential and commercial real estate-

secured transactions, excluding

transactions for acquisition,

development, and construction of real

estate, which mean, for purposes of this

rule, loans secured by real estate made

to finance (a) land development (i.e., the

process of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures, (b) the on-site

construction of industrial, commercial,

residential, or farm buildings (including

not only construction of new structures,

but also additions or alterations to

existing structures and the demolition of

existing structures to make way for new

structures

evelopment (i.e., the

process of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures, (b) the on-site

construction of industrial, commercial,

residential, or farm buildings (including

not only construction of new structures,

but also additions or alterations to

existing structures and the demolition of

existing structures to make way for new

structures), (c) loans secured by vacant

land, except land known to be used or

useable for agricultural purposes, such

as crop and livestock production, (d)

loans secured by real estate the proceeds

of which are to be used to acquire and

improve developed and undeveloped

property, and (e) loans made under Title

I or Title X of the National Housing Act

that conform to the definition of

construction stated above and that are

secured by real estate.

The temporary provision allowing

regulated institutions to defer appraisals

or evaluations for covered transactions

will expire on December 31, 2020,

unless extended by the agencies. As

with the interim final rule, this final

rule does not revise any of the existing

appraisal exceptions or any other

requirements with respect to the

performance of evaluations. The

agencies expect all appraisals, including

deferred appraisals, to comply with

USPAP, as issued by the Appraisal

Standards Board of the Appraisal

Foundation.

V. Administrative Law Matters

A. Administrative Procedure Act

The Administrative Procedure Act

(APA) generally requires that a final rule

be published in the Federal Register no

less than 30 days before its effective

date except for (1) substantive rules,

which grant or recognize an exemption

or relieve a restriction; (2) interpretative

rules and statements of policy; or (3) as

otherwise provided by the agency for

good cause.26 Because the final rule

relieves a restriction, the final rule is

exempt from the APA’s delayed

effective date requirement.27

Additionally, the agencies find good

cause to publish the final rule with an

VerDat

les,

which grant or recognize an exemption

or relieve a restriction; (2) interpretative

rules and statements of policy; or (3) as

otherwise provided by the agency for

good cause.26 Because the final rule

relieves a restriction, the final rule is

exempt from the APA’s delayed

effective date requirement.27

Additionally, the agencies find good

cause to publish the final rule with an

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

28 5 U.S.C. 801 et seq.

29 5 U.S.C. 801(a)(3).

30 5 U.S.C. 804(2).

31 44 U.S.C. 3501–3521.

32 12 U.S.C. 4802(a).

33 12 U.S.C. 4802.

34 12 U.S.C. 4809.

35 See 2 U.S.C. 1532(a).

immediate effective date. The agencies

believe that the public interest is best

served by implementing the final rule as

soon as possible. As discussed above,

recent events have suddenly and

significantly affected global economic

activity, increasing businesses’ and

households’ need to have timely access

to liquidity from real estate equity. In

addition, the spread of COVID–19 has

greatly increased the difficulty of

performing real estate appraisals and

evaluations in a timely manner. The

relief provided by the final rule will

continue to allow regulated institutions

to better focus on supporting lending to

creditworthy households and businesses

in light of recent strains on the U.S.

economy as a result of COVID–19, while

reaffirming the safety and soundness

principle that valuation of collateral is

an essential part of the lending decision.

Finally, the agencies believe that

implementing the final rule as soon as

possible, with its clarifying language, is

consistent with the agencies’ intent to

continue to grant expedited relief to the

regulated entities. Therefore, the final

rule will become effective October 16,

2020 through December 31, 2020.

B

le that valuation of collateral is

an essential part of the lending decision.

Finally, the agencies believe that

implementing the final rule as soon as

possible, with its clarifying language, is

consistent with the agencies’ intent to

continue to grant expedited relief to the

regulated entities. Therefore, the final

rule will become effective October 16,

2020 through December 31, 2020.

B. Congressional Review Act

For purposes of Congressional Review

Act, the Office of Management and

Budget (OMB) makes a determination as

to whether a final rule constitutes a

‘‘major’’ rule.28 If a rule is deemed a

‘‘major rule’’ by the OMB, the

Congressional Review Act generally

provides that the rule may not take

effect until at least 60 days following its

publication.29

The Congressional Review Act defines

a ‘‘major rule’’ as any rule that the

Administrator of the Office of

Information and Regulatory Affairs of

the OMB finds has resulted in or is

likely to result in (A) an annual effect

on the economy of $100,000,000 or

more; (B) a major increase in costs or

prices for consumers, individual

industries, Federal, State, or local

government agencies or geographic

regions; or (C) significant adverse effects

on competition, employment,

investment, productivity, innovation, or

on the ability of United States-based

enterprises to compete with foreign-

based enterprises in domestic and

export markets.30

As required by the Congressional

Review Act, the agencies will submit

the final rule and other appropriate

reports to Congress and the Government

Accountability Office for review.

C. Paperwork Reduction Act

In accordance with the requirements

of the Paperwork Reduction Act of

1995 31 (PRA), the agencies may not

conduct or sponsor, and a respondent is

not required to respond to, an

information collection unless it displays

a currently valid OMB control number

e final rule and other appropriate

reports to Congress and the Government

Accountability Office for review.

C. Paperwork Reduction Act

In accordance with the requirements

of the Paperwork Reduction Act of

1995 31 (PRA), the agencies may not

conduct or sponsor, and a respondent is

not required to respond to, an

information collection unless it displays

a currently valid OMB control number.

The agencies have reviewed this final

rule and determined that it would not

introduce any new or revise any

collection of information pursuant to

the PRA. Therefore, no submissions will

be made to OMB for review.

D. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA)

requires an agency to consider whether

the rules it proposes will have a

significant economic impact on a

substantial number of small entities.

The RFA applies only to rules for which

an agency publishes a general notice of

proposed rulemaking pursuant to 5

U.S.C. 553(b). Since the agencies were

not required to issue a general notice of

proposed rulemaking associated with

the interim final rule or this final rule,

no RFA is required. Accordingly, the

agencies have concluded that the RFA’s

requirements relating to initial and final

regulatory flexibility analysis do not

apply.

E. Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act

(RCDRIA),32 in determining the effective

date and administrative compliance

requirements for new regulations that

impose additional reporting, disclosure,

or other requirements on insured

depository institutions (IDIs), each

Federal banking agency must consider,

consistent with the principle of safety

and soundness and the public interest,

any administrative burdens that such

regulations would place on depository

institutions, including small depository

institutions, and customers of

depository institutions, as well as the

benefits of such regulations

uirements on insured

depository institutions (IDIs), each

Federal banking agency must consider,

consistent with the principle of safety

and soundness and the public interest,

any administrative burdens that such

regulations would place on depository

institutions, including small depository

institutions, and customers of

depository institutions, as well as the

benefits of such regulations. In addition,

section 302(b) of RCDRIA requires new

regulations and amendments to

regulations that impose additional

reporting, disclosure, or other new

requirements on IDIs generally to take

effect on the first day of a calendar

quarter that begins on or after the date

on which the regulations are published

in final form.33 Each Federal banking

agency has determined that the final

rule would not impose any additional

reporting, disclosure, or other new

requirements on IDIs, and thus the

requirements of the RCDRIA do not

apply.

F. Use of Plain Language

Section 722 of the Gramm-Leach-

Bliley Act 34 requires the Federal

banking agencies to use plain language

in all proposed and final rules

published after January 1, 2000. The

agencies have sought to present the final

rule in a simple and straightforward

manner and did not receive any

comments on the use of plain language.

G. OCC Unfunded Mandates Reform Act

of 1995 Determination

Under the Unfunded Mandates

Reform Act of 1995 (UMRA), 2 U.S.C.

1531 et seq., the OCC prepares a

budgetary impact statement before

promulgating a rule that includes a

Federal mandate that may result in the

expenditure by State, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. However, the UMRA

does not apply to final rules for which

a general notice of proposed rulemaking

was not published.35 Therefore, because

the OCC found good cause to dispense

with notice and comment for the

interim final rule, the OCC has not

prepared an economic analysis of the

final rule under the UMRA

in the aggregate, or by the

private sector, of $100 million or more

in any one year. However, the UMRA

does not apply to final rules for which

a general notice of proposed rulemaking

was not published.35 Therefore, because

the OCC found good cause to dispense

with notice and comment for the

interim final rule, the OCC has not

prepared an economic analysis of the

final rule under the UMRA.

List of Subjects

12 CFR Part 34

Appraisal, Appraiser, Banks, banking,

Consumer protection, Credit, Mortgages,

National banks, Reporting and

recordkeeping requirements, Savings

associations, Truth in lending.

12 CFR Part 225

Administrative practice and

procedure, Banks, banking, Federal

Reserve System, Capital planning,

Holding companies, Reporting and

recordkeeping requirements, Securities,

Stress testing.

12 CFR Part 323

Banks, banking, Mortgages, Reporting

and recordkeeping requirements,

Savings associations.

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Chapter I

Authority and Issuance

For the reasons set forth in the joint

preamble, the OCC amends part 34 of

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

chapter I of title 12 of the Code of

Federal Regulations as follows:

PART 34—REAL ESTATE LENDING

AND APPRAISALS

■1. The authority citation for part 34

continues to read as follows:

Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,

371, 1462a, 1463, 1464, 1465, 1701j-3,

1828(o), 3331 et seq., 5101 et seq., and

5412(b)(2)(B) and 15 U.S.C. 1639h.

■2. Section 34.43 is amended by

revising paragraph (f) to read as follows:

§ 34.43

Appraisals required; transactions

requiring a State certified or licensed

appraiser.

*

*

*

*

*

ion for part 34

continues to read as follows:

Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,

371, 1462a, 1463, 1464, 1465, 1701j-3,

1828(o), 3331 et seq., 5101 et seq., and

5412(b)(2)(B) and 15 U.S.C. 1639h.

■2. Section 34.43 is amended by

revising paragraph (f) to read as follows:

§ 34.43

Appraisals required; transactions

requiring a State certified or licensed

appraiser.

*

*

*

*

*

(f) Deferrals of appraisals and

evaluations for certain residential and

commercial transactions—(1) 120-day

grace period. The completion of

appraisals and evaluations required

under paragraphs (a) and (b) of this

section may be deferred up to 120 days

from the date of closing.

(2) Covered transactions. The

deferrals authorized under paragraph

(f)(1) of this section apply to all

residential and commercial real estate-

secured transactions, excluding

transactions for the acquisition,

development, and construction of real

estate which, for purposes of this rule,

mean those loans described in

paragraphs (f)(2)(i) through (iv) of this

section. The term ‘‘construction’’ as

used in this paragraph (f)(2) includes

not only construction of new structures,

but also additions or alterations to

existing structures and the demolition of

existing structures to make way for new

structures. The following loan

transactions are excluded from the

deferrals authorized under paragraph

(f)(1) of this section:

(i) Loans secured by real estate made

to finance:

(A) Land development (such as the

process of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures; or

(B) The on-site construction of

industrial, commercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

rocess of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures; or

(B) The on-site construction of

industrial, commercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

(iv) Loans made under Title I or Title

X of the National Housing Act that:

(A) Conform to the definition of

‘‘construction’’ as defined in paragraph

(f)(2) of this section; and

(B) Are secured by real estate.

(3) Sunset. The appraisal and

evaluation deferrals authorized by

paragraph (f) of this section will expire

for transactions closing after December

31, 2020.

Federal Reserve Board

12 CFR Chapter II

Authority and Issuance

For the reasons set forth in the joint

preamble, the Board amends part 225 of

chapter II of title 12 of the Code of

Federal Regulations as follows:

PART 225—BANK HOLDING

COMPANIES AND CHANGE IN BANK

CONTROL (REGULATION Y)

■3. The authority citation for part 225

continues to read as follows:

Authority: 12 U.S.C. 1817(j)(13), 1818,

1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),

1972(1), 3106, 3108, 3310, 3331–3351, 3906,

3907, and 3909; 15 U.S.C. 1681s, 1681w,

6801 and 6805.

■4. Section 225.63 is amended by

revising paragraph (f) to read as follows:

§ 225.63

Appraisals required; transactions

requiring a State certified or licensed

appraiser.

*

*

*

*

*

(f) Deferrals of appraisals and

evaluations for certain residential and

commercial transactions—(1) 120-day

grace period. The completion of

appraisals and evaluations required

under paragraphs (a) and (b) of this

section may be deferred up to 120 days

from the date of closing.

(2) Covered transactions. The

deferrals authorized under paragraph

ified or licensed

appraiser.

*

*

*

*

*

(f) Deferrals of appraisals and

evaluations for certain residential and

commercial transactions—(1) 120-day

grace period. The completion of

appraisals and evaluations required

under paragraphs (a) and (b) of this

section may be deferred up to 120 days

from the date of closing.

(2) Covered transactions. The

deferrals authorized under paragraph

(f)(1) of this section apply to all

residential and commercial real estate-

secured transactions, excluding

transactions for the acquisition,

development, and construction of real

estate which, for purposes of this rule,

mean those loans described in

paragraphs (f)(2)(i) through (iv) of this

section. The term ‘‘construction’’ as

used in this paragraph (f)(2) includes

not only construction of new structures,

but also additions or alterations to

existing structures and the demolition of

existing structures to make way for new

structures. The following loan

transactions are excluded from the

deferrals authorized under paragraph

(f)(1) of this section:

(i) Loans secured by real estate made

to finance:

(A) Land development (such as the

process of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures; or

(B) The on-site construction of

industrial, commercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

(iv) Loans made under Title I or Title

X of the National Housing Act that:

(A) Conform to the definition of

‘‘construction’’ as defined in paragraph

mercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

(iv) Loans made under Title I or Title

X of the National Housing Act that:

(A) Conform to the definition of

‘‘construction’’ as defined in paragraph

(f)(2) of this section; and

(B) Are secured by real estate.

(3) Sunset. The appraisal and

evaluation deferrals authorized by

paragraph (f) of this section will expire

for transactions closing after December

31, 2020.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons set forth in the joint

preamble, the FDIC amends part 323 of

chapter III of title 12 of the Code of

Federal Regulations as follows:

PART 323—APPRAISALS

■5. The authority citation for part 323

continues to read as follows:

Authority: 12 U.S.C. 1818, 1819(a)

(‘‘Seventh’’ and ‘‘Tenth’’), 1831p–1 and 3331

et seq.

■6. Section 323.3 is amended by

revising paragraph (g) to read as follows:

§ 323.3

Appraisals required; transactions

requiring a State certified or licensed

appraiser.

*

*

*

*

*

(g) Deferrals of appraisals and

evaluations for certain residential and

commercial transactions—(1) 120-day

grace period. The completion of

appraisals and evaluations required

under paragraphs (a) and (b) of this

section may be deferred up to 120 days

from the date of closing.

(2) Covered transactions. The

deferrals authorized under paragraph

ified or licensed

appraiser.

*

*

*

*

*

(g) Deferrals of appraisals and

evaluations for certain residential and

commercial transactions—(1) 120-day

grace period. The completion of

appraisals and evaluations required

under paragraphs (a) and (b) of this

section may be deferred up to 120 days

from the date of closing.

(2) Covered transactions. The

deferrals authorized under paragraph

(g)(1) of this section apply to all

residential and commercial real estate-

secured transactions, excluding

transactions for the acquisition,

development, and construction of real

estate which, for purposes of this rule,

mean those loans described in

paragraphs (g)(2)(i) through (iv) of this

section. The term ‘‘construction’’ as

used in this paragraph (g)(2) includes

not only construction of new structures,

but also additions or alterations to

existing structures and the demolition of

existing structures to make way for new

structures. The following loan

transactions are excluded from the

deferrals authorized under paragraph

(g)(1) of this section:

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Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Rules and Regulations

(i) Loans secured by real estate made

to finance:

(A) Land development (such as the

process of improving land—laying

sewers, water pipes, etc.) preparatory to

erecting new structures; or

(B) The on-site construction of

industrial, commercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

(iv) Loans made under Title I or Title

X of the National Housing Act that:

(A) Conform to the definition of

‘‘construction’’ as defined in paragraph

mercial, residential, or

farm buildings;

(ii) Loans secured by vacant land

(except land known to be used or usable

for agricultural purposes);

(iii) Loans secured by real estate to

acquire and improve developed or

undeveloped property; and

(iv) Loans made under Title I or Title

X of the National Housing Act that:

(A) Conform to the definition of

‘‘construction’’ as defined in paragraph

(g)(2) of this section; and

(B) Are secured by real estate.

(3) Sunset. The appraisal and

evaluation deferrals authorized by this

paragraph (g) will expire for

transactions closing after December 31,

2020.

Brian P. Brooks

Acting Comptroller of the Currency Office

of the Comptroller of the Currency Board

of Governors of the Federal Reserve System.

Ann E. Misback,

Secretary of the Board.

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on or about

September 15, 2020.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2020–21563 Filed 10–15–20; 8:45 am]

BILLING CODE 4810–33–P 6210–01–P 6714–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA–2020–0676; Product

Identifier 2020–NM–085–AD; Amendment

39–21287; AD 2020–21–14]

RIN 2120–AA64

Airworthiness Directives; ATR—GIE

Avions de Transport Re´gional

Airplanes

AGENCY: Federal Aviation

Administration (FAA), Department of

Transportation (DOT).

ACTION: Final rule.

SUMMARY: The FAA is adopting a new

airworthiness directive (AD) for all

ATR—GIE Avions de Transport

Re´gional Model ATR72 airplanes. This

AD was prompted by reports of main

landing gear (MLG) hinge pins found

cracked or thermally abused. This AD

requires replacing certain MLG hinge

pins with serviceable parts, or replacing

an MLG equipped with any affected

MLG hinge pin with an MLG equipped

with serviceable MLG hinge pins, as

specified in a European Union Aviation

Safety Agency (EASA) AD, which is

incorporated by reference

AD was prompted by reports of main

landing gear (MLG) hinge pins found

cracked or thermally abused. This AD

requires replacing certain MLG hinge

pins with serviceable parts, or replacing

an MLG equipped with any affected

MLG hinge pin with an MLG equipped

with serviceable MLG hinge pins, as

specified in a European Union Aviation

Safety Agency (EASA) AD, which is

incorporated by reference. The FAA is

issuing this AD to address the unsafe

condition on these products.

DATES: This AD is effective November

20, 2020.

The Director of the Federal Register

approved the incorporation by reference

of a certain publication listed in this AD

as of November 20, 2020.

ADDRESSES: For material incorporated

by reference (IBR) in this AD, contact

the EASA, Konrad-Adenauer-Ufer 3,

50668 Cologne, Germany; telephone +49

221 8999 000; email ADs@

easa.europa.eu; internet

www.easa.europa.eu. You may find this

IBR material on the EASA website at

https://ad.easa.europa.eu. You may

view this IBR material at the FAA,

Airworthiness Products Section,

Operational Safety Branch, 2200 South

216th St., Des Moines, WA. For

information on the availability of this

material at the FAA, call 206–231–3195.

It is also available in the AD docket on

the internet at https://

www.regulations.gov by searching for

and locating Docket No. FAA–2020–

0676.

Examining the AD Docket

You may examine the AD docket on

the internet at https://

www.regulations.gov by searching for

and locating Docket No. FAA–2020–

0676; or in person at Docket Operations

between 9 a.m. and 5 p.m., Monday

through Friday, except Federal holidays.

The AD docket contains this final rule,

any comments received, and other

information. The address for Docket

Operations is U.S. Department of

Transportation, Docket Operations, M–

30, West Building Ground Floor, Room

W12–140, 1200 New Jersey Avenue SE,

Washington, DC 20590

0676; or in person at Docket Operations

between 9 a.m. and 5 p.m., Monday

through Friday, except Federal holidays.

The AD docket contains this final rule,

any comments received, and other

information. The address for Docket

Operations is U.S. Department of

Transportation, Docket Operations, M–

30, West Building Ground Floor, Room

W12–140, 1200 New Jersey Avenue SE,

Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Shahram Daneshmandi, Aerospace

Engineer, Large Aircraft Section,

International Validation Branch, FAA,

2200 South 216th St., Des Moines, WA

98198; telephone and fax 206–231–

3220; email Shahram.Daneshmandi@

faa.gov.

SUPPLEMENTARY INFORMATION:

Discussion

The EASA, which is the Technical

Agent for the Member States of the

European Union, has issued EASA AD

2020–0101, dated May 5, 2020 (‘‘EASA

AD 2020–0101’’) (also referred to as the

Mandatory Continuing Airworthiness

Information, or ‘‘the MCAI’’), to correct

an unsafe condition for all ATR—GIE

Avions de Transport Re´gional Model

ATR72 airplanes.

The FAA issued a notice of proposed

rulemaking (NPRM) to amend 14 CFR

part 39 by adding an AD that would

apply to all ATR—GIE Avions de

Transport Re´gional Model ATR72

airplanes. The NPRM published in the

Federal Register on July 31, 2020 (85 FR

46010). The NPRM was prompted by

MLG hinge pins found cracked or

thermally abused. The NPRM proposed

to require replacing certain MLG hinge

pins with serviceable parts, or replacing

an MLG equipped with any affected

MLG hinge pin with an MLG equipped

with serviceable MLG hinge pins, as

specified in EASA AD 2020–0101.

The FAA is issuing this AD to address

MLG hinge pins subjected to a non-

detected thermal abuse during

production, which could lead to

structural failure and consequent

collapse of the MLG, resulting in

damage to the airplane and injury to the

occupants. See the MCAI for additional

background information

an MLG equipped

with serviceable MLG hinge pins, as

specified in EASA AD 2020–0101.

The FAA is issuing this AD to address

MLG hinge pins subjected to a non-

detected thermal abuse during

production, which could lead to

structural failure and consequent

collapse of the MLG, resulting in

damage to the airplane and injury to the

occupants. See the MCAI for additional

background information.

Comments

The FAA gave the public the

opportunity to participate in developing

this final rule. The FAA received no

comments on the NPRM or on the

determination of the cost to the public.

Conclusion

The FAA reviewed the relevant data

and determined that air safety and the

public interest require adopting this

final rule as proposed, except for minor

editorial changes. The FAA has

determined that these minor changes:

• Are consistent with the intent that

was proposed in the NPRM for

addressing the unsafe condition; and

• Do not add any additional burden

upon the public than was already

proposed in the NPRM.

Related IBR Material Under 1 CFR Part

51

EASA AD 2020–0101 describes

procedures for replacing certain MLG

hinge pins with serviceable parts, or

replacing an MLG equipped with any

affected MLG hinge pin with an MLG

equipped with serviceable MLG hinge

pins. This material is reasonably

available because the interested parties

have access to it through their normal

course of business or by the means

identified in the ADDRESSES section.

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