The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Federal Reserve Bank of Dallas
2200 N. PEARL ST.
DALLAS, TX 75201-2272
October 18, 2005
Notice 05-62
TO: The Chief Executive Officer of each
state member bank and bank holding company
in the Eleventh Federal Reserve District
SUBJECT
Waiver of Appraisal Requirements for Financial Institutions
Affected by Hurricanes Katrina and Rita
DETAILS
The Federal Reserve and the other federal financial institutions regulatory agencies have
granted a waiver of their appraisal regulations for three years to regulated financial institutions
that are entering into transactions with borrowers affected by Hurricanes Katrina and Rita
(“hurricanes”). The waiver is expected to reduce loan processing times and, therefore, may assist
institutions in responding to the financial needs of borrowers affected by the hurricanes. See the
attached joint Federal Register notice.
The waiver covers real estate-related transactions involving real estate located in certain
Alabama, Mississippi, and Texas counties and Louisiana parishes that have been designated by
the Federal Emergency Management Agency (FEMA) as qualifying for “Individual and Public
Assistance (all categories)” and “Individual and Public Assistance (Categories A and B)” as a
result of the hurricanes. A listing of the designated disaster areas is in the appendix of the attached Federal Register notice. Exceptions for the major disasters declared due to Hurricane
Katrina will expire on August 29, 2008, in Alabama, Mississippi, and Louisiana, and for Hurricane Rita on September 24, 2008, in Louisiana and Texas.
To qualify for the waiver, a financial institution needs to document that:
(1) The transaction involves real property located in the designated disaster areas;
(2) The property involved was directly affected by the major disaster or the transaction
would facilitate recovery from the disaster(s);
For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.
-2-
(3) There is a binding commitment to fund the transaction that is made within three years
after the date the major disaster was declared; and
(4) The value of the real property supports the institution’s decision to enter into the
transaction.
ATTACHMENTS
A copy of the Board’s SR letter dated October 11, 2005, and the agencies’ notice as it
appears on pages 59987–88, Vol. 70, No. 198 of the Federal Register dated October 14, 2005, are
attached.
MORE INFORMATION
For more information, please contact Bobby Coberly, (214) 922-6209, or Randy Steinley,
(713) 483-3117, Banking Supervision Department. Previous Federal Reserve Bank notices are
available on our web site at www.dallasfed.org/banking/notices/index.html or by contacting
the Public Affairs Department at (214) 922-5254.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
DIVISION OF BANKING
SUPERVISION AND
REGULATION
SR 05-18
October 11, 2005
TO THE OFFICER IN CHARGE OF SUPERVISION AND
APPROPRIATE SUPERVISORY STAFF AT EACH FEDERAL
RESERVE BANK AND BANKING ORGANIZATIONS
SUPERVISED BY THE FEDERAL RESERVE
SUBJECT: Waiver of the Appraisal Regulation for Regulated Institutions Affected by Hurricanes
Katrina and Rita
The Federal Reserve and the other federal financial institutions regulatory
agencies have granted a waiver of their appraisal regulations for three years to regulated
financial institutions that are entering into transactions with borrowers affected by Hurricanes
Katrina and Rita ("Hurricanes"). The waiver is expected to reduce loan processing times and,
therefore, may assist institutions in responding to the financial needs of borrowers affected by
the Hurricanes. See the attached joint Federal Register notice.1
The waiver covers real estate-related transactions involving real estate located in
certain Alabama, Mississippi, and Texas counties and Louisiana parishes that have been
designated by the Federal Emergency Management Agency (FEMA) as qualifying for
"Individual and Public Assistance (all categories)" and "Individual and Public Assistance
(Categories A and B)" as a result of the Hurricanes. A listing of the designated disaster areas
is in the appendix of the attached Federal Register notice. Exceptions for the major disasters
declared due to Hurricane Katrina will expire on August 29, 2008, in Alabama, Mississippi, and
Louisiana, and for Hurricane Rita on September 24, 2008, in Louisiana and Texas.
To qualify for the waiver, a financial institution needs to document that: (1) the
transaction involves real property located in the designated disaster areas; (2) the property
involved was directly affected by the major disaster or the transaction would facilitate
recovery from the disaster(s); (3) there is a binding commitment to fund the transaction that is
made within three years after the date the major disaster was declared; and (4) the value of
the real property supports the institution's involvement in the transaction.
Whether or not an institution elects to take advantage of this waiver is a business decision
that may be determined by the institution on a case-by-case basis. When an institution
decides to rely on the appraisal waiver for a particular real estate-related transaction, the
institution should provide sufficient documentation in the loan file to support its credit decision
and assessment of the collateral's value.2 Institutions should continue to extend credit on
terms that are consistent with safe and sound banking principles.
1 of 2
Reserve Banks are asked to provide a copy of this letter and the Federal Register
notice to state member banks and bank holding companies and to appropriate supervision
staff. Questions concerning the appraisal waiver should be directed to Ms. Virginia Gibbs,
Senior Supervisory Financial Analyst, at 202-452-2521. Additional materials and guidance
issued by the Federal Reserve and related to the recent Hurricanes can be found on the
Board's website on the Hurricane Katrina web page.
Richard Spillenkothen
Director
Attachment:
Federal Register
Department of the Treasury – Office of the Comptroller of the Currency
Federal Reserve System
Federal Deposit Insurance Corporation
Department of the Treasury – Office of Thrift Supervision
National Credit Union Administration
Notes:
1. This action is being taken pursuant to the agencies' authority under the Depository
Institutions Disaster Relief Act (DIDRA) of 1992 to waive the appraisal requirements
of Title XI of the Financial Institutions Reform, Recovery, and Enforcement
Act (FIRREA) and the agencies' appraisal regulations for up to 36 months when the
President, pursuant to section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, determines that a major disaster exists and the
agencies determine that such waiver would both facilitate recovery in the disaster
area and be consistent with safety and soundness.
2. See SR letter 94-55 for the Interagency Appraisal and Evaluation Guidelines for
guidance on evaluating collateral.
2 of 2
59987
Rules and Regulations
Federal Register
Vol. 70, No. 198
Friday, October 14, 2005
disaster areas when the exceptions
would facilitate recovery from the
disaster and would be consistent with
safety and soundness. In this notice, the
Agencies grant exceptions for certain
real estate-related transactions in areas
affected by Hurricanes Katrina and Rita.
The expiration dates for the exceptions
are set out in the SUPPLEMENTARY
INFORMATION section.
This order is effective on October
14, 2005 and expires for specific areas
on the dates indicated in the
SUPPLEMENTARY INFORMATION section.
DATES:
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FOR FURTHER INFORMATION CONTACT:
OCC
12 CFR Part 34
Dena G. Patel, Credit Risk Specialist,
(202) 874–5170, Office of the Chief
National Bank Examiner; or Sue
Auerbach, Counsel, (202) 874–5300,
Chief Counsel’s Office, 250 E Street,
SW., Washington, DC 20219.
FEDERAL RESERVE SYSTEM
12 CFR Part 225
FEDERAL DEPOSIT INSURANCE
CORPORATION
Board
12 CFR Part 323
Virginia M. Gibbs, Senior Supervisory
Financial Analyst, (202) 452–2521,
Division of Banking Supervision and
Regulation; or April Snyder, Attorney,
(202) 452–3099, Legal Division. Mail:
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC, 20551.
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 564
NATIONAL CREDIT UNION
ADMINISTRATION
FDIC
12 CFR Part 722
Real Estate Appraisal Exceptions in
Major Disaster Areas
Office of the Comptroller of
the Currency, Treasury Department
(OCC); Board of Governors of the
Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC);
Office of Thrift Supervision, Treasury
Department (OTS); and National Credit
Union Administration (NCUA),
collectively referred to as ‘‘the
Agencies.’’
ACTION: Statement and Order; temporary
exceptions.
AGENCIES:
Section 2 of the Depository
Institutions Disaster Relief Act of 1992
(DIDRA) authorizes the Agencies to
make exceptions to statutory and
regulatory requirements relating to
appraisals for certain transactions. The
exceptions are available for transactions
that involve real property in major
SUMMARY:
VerDate Aug<31>2005
15:42 Oct 13, 2005
Jkt 208001
James D. Leitner, Examination
Specialist, (202) 898–6790, Division of
Supervision and Consumer Protection;
or Mark G. Flanigan, Counsel, (202)
898–7426, Legal Division, 550 17th
Street, NW., Washington, DC 20429.
OTS
Deborah Merkle, Project Manager,
Credit Policy, (202) 906–5688; Karen
Osterloh, Special Counsel, Regulation
and Legislation Division, Chief
Counsel’s Office, (202) 906–6639, Office
of Thrift Supervision, 1700 G Street,
NW., Washington, DC 20552.
NCUA
Regina Metz, Staff Attorney, Office of
General Counsel, (703) 518–6540; or
Anthony LaCreta, Deputy Director,
Office of Examination and Insurance,
(703) 518–6360, 1775 Duke Street,
Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00001
Fmt 4700
Sfmt 4700
Statement
Section 2 of DIDRA, 12 U.S.C. 3352,
authorizes the Agencies to make
exceptions to statutory and regulatory
appraisal requirements for certain
transactions. These exceptions are
available for real property located in
areas that the President has determined,
pursuant to 42 U.S.C. 5170, that a major
disaster exists, provided that the
exception would facilitate recovery from
the major disaster and is consistent with
safety and soundness.1 Such exceptions
expire not later than three years after the
date of the President’s determination
that a major disaster exists in the area.
On August 29, and September 24,
2005, the President declared several
areas in certain Alabama, Mississippi,
and Texas counties and Louisiana
parishes as Major Disaster Areas and
individual assistance was authorized by
the Federal Emergency Management
Agency (‘‘FEMA’’) as a result of the
extensive damage caused by Hurricanes
Katrina and Rita. The Agencies believe
that granting relief from the appraisal
requirements for real estate transactions
in certain designated disaster areas is
consistent with the provisions of
DIDRA.2
The Agencies have determined that
the disruption of real estate markets in
those FEMA-designated disaster areas
interferes with the ability of depository
institutions to obtain appraisals that
comply with statutory and regulatory
requirements. Therefore, the Agencies
have determined that the disruption
may impede institutions in making
loans and engaging in other transactions
that would aid in the reconstruction and
rehabilitation of the affected areas.
Accordingly, the Agencies have
determined that recovery from these two
major disasters would be facilitated by
excepting certain transactions involving
real estate located in the areas directly
affected by the hurricanes from the real
estate appraisal requirements of Title XI
of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989
(FIRREA), as amended, and the
regulations promulgated thereunder.
1 The agencies must make the exception no later
than 30 months after the date on which the
President determines that a major disaster exists in
the area.
2 Those counties and parishes designated by
FEMA as receiving ‘‘Individual and Public
Assistance (all categories)’’ and ‘‘Individual and
Public Assistance (Categories A and B).’’
E:\FR\FM\14OCR1.SGM
14OCR1
59988
Federal Register / Vol. 70, No. 198 / Friday, October 14, 2005 / Rules and Regulations
This order has the effect of excepting
the transactions specified below from
the definition of ‘‘federally related
transactions’’ in Title XI of FIRREA and
the agencies’ appraisal regulations, and
thereby from the statutory and
regulatory real estate appraisal
requirements for such transactions.
The Agencies also have determined
that the exceptions are consistent with
safety and soundness, subject to the
requirement that the depository
institution’s records relating to any
excepted transaction appropriately
document the following: (1) The
property involved was directly affected
by the major disaster or the transaction
would facilitate recovery from the
disaster; (2) there is a binding
commitment to fund the transaction that
is made within three years after the date
the major disaster was declared; and (3)
the value of the real property supports
the institution’s decision to enter into
the transaction. In addition, the
transaction must continue to be subject
to review by management and by the
Agencies in the course of examinations
of the institution.
(2)(a) The real property involved was
directly affected by the major disaster;
or
(2)(b) The real property involved was
not directly affected by the major
disaster but the transaction would
facilitate recovery from the disaster;
(3) There is a binding commitment to
fund a transaction that is made within
three years after the date the major
disaster was declared by the President;
and
(4) The institution retains in its files,
for examiner review, appropriate
documentation indicating that the
requirements of Items (1)–(3) above are
met and supporting the valuation of the
real property involved in the
transaction.
Dated: October 4, 2005.
Jennifer J. Johnson,
Secretary of the Board.
By order of the Board of Directors.
Dated at Washington, DC, this 4th day of
October, 2005.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: October 6, 2005.
By the Office of Thrift Supervision.
John M. Reich,
Director.
By order of the National Credit Union
Administration.
Dated: October 4, 2005.
Mary F. Rupp,
Secretary of the Board.
Appendix
BILLING CODE 6714–01–P; 4810–33–P; 6210–01–P;
6720–01–P; 7535–01–P
agencies’ appraisal regulations for any
real estate-related financial transaction
that requires the services of an appraiser
under those provisions, provided that:
(1) The transaction involves real
property located in an area that the
President has determined, pursuant to
section 401 of DREAA, is a major
disaster area as a result of Hurricane
Katrina (August 2005) in Alabama,
Louisiana, and Mississippi; or as a
result of Hurricane Rita (September
2005) in Louisiana and Texas, and has
been designated eligible for federal
assistance by FEMA; 3
Hurricane Rita
[FR Doc. 05–20583 Filed 10–13–05; 8:45 am]
Counties and parishes designated by FEMA
as receiving ‘‘Individual and Public
Assistance (all categories)’’ and ‘‘Individual
and Public Assistance (Categories A and B)’’
Hurricane Katrina
Alabama: Baldwin, Choctaw, Clarke, Greene,
Hale, Mobile, Pickens, Sumter, Tuscaloosa
and Washington
Expiration Dates
Louisiana: Acadia, Ascension, Assumption,
Exceptions provided under this order
Calcasieu, Cameron, East Baton Rouge, East
expire not later than three years after the
Feliciana, Iberia, Iberville, Jefferson,
date on which the President determines,
Jefferson Davis, Lafayette, Lafourche,
pursuant to section 401 of the Robert T.
Livingston, Orleans, Pointe Coupee,
Plaquemines, St. Bernard, St. Charles, St.
Stafford Disaster Relief and Emergency
Helena, St. James, St. John the Baptist, St.
Assistance Act, 42 U.S.C. 5170
VerDate Aug<31>2005 15:42 Oct 13, 2005 Jkt 208001 PO 00000Mary,
Frm 00002
Fmt 4700
Sfmt 4700 E:\FR\FM\14OCR1.SGM 14OCR1
St. Martin,
St. Tammany,
(DREAA), that a major disaster exists in
Tangipahoa,
Terrebonne,
Vermilion,
the area. Accordingly, exceptions for the
Washington, West Baton Rouge, and West
major disasters declared due to
Feliciana
Hurricane Katrina expire on August 29,
Mississippi: Adams, Amite, Attala, Choctaw,
2008, in Alabama, Mississippi and
Claiborne, Clarke, Copiah, Covington,
Louisiana; and exceptions for the major
Forrest, Franklin, George, Greene,
disasters declared due to Hurricane Rita
Hancock, Harrison, Hinds, Jackson, Jasper,
expire on September 24, 2008, in
Jefferson, Jefferson Davis, Jones, Kemper,
Lamar, Lauderdale, Lawrence, Leake,
Louisiana and Texas.
Lincoln, Lowndes, Madison, Marion,
Order
Neshoba, Newton, Noxubee, Oktibbeha,
Pearl River, Perry, Pike, Rankin, Scott,
In accordance with section 2 of
Simpson, Smith, Stone, Walthall, Warren,
DIDRA, relief is hereby granted from the
Wayne, Wilkinson, Winston, and Yazoo.
provisions of Title XI of FIRREA and the
3 Those areas designated by FEMA as receiving
‘‘Individual and Public Assistance (all categories)’’
Louisiana: Acadia, Allen, Beauregard,
Calcasieu, Cameron, Iberia, Jefferson Davis,
Lafayette, Lafourche, St. Mary, Terrebonne,
and Vermilion
Texas: Chambers, Galveston, Hardin, Jasper,
Jefferson, Liberty, Newton, Orange, and
Tyler
Dated: October 5, 2005.
John C. Dugan,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System.
and ‘‘Individual and Public Assistance (Categories
A and B)’’ in Alabama, Mississippi, and Texas
counties and Louisiana parishes, as listed in the
appendix to this order.
@FedFRASER