Earlier this week, an interim final rule was released that allows us to temporarily defer certain appraisals and evaluations for 120 days. Specifically excluded are loans for "acquisition, development, and construction". What is meant by the term "acquisition"? Does this mean a purchase loan where a borrower acquires a new home? Or does this mean something different like acquiring land for future development? The term was not defined in the rule.

acquisition equals purchase.

So we're only allowed to defer the appraisal on refinances??

The reason being is that you should already have a fairly good idea on property value.

Maybe it's because it is a Friday afternoon and I'm running on fumes, but are the agencies just telling us that AFTER 12/31/2020 we go back to business as usual in this statement?

"BY THE END OF THE DEFERRAL PERIOD, . . . must obtain appraisals or evaluations that are consistent with safe and sound banking practices, . . . . " (end of Background section)

My first read through I thought it was saying we had to have all appraisals or evaluations in place by 12/31/2020, but then I read further in the Summary and it said loans closed up to 12/31/2020 were eligible for deferral.

Randy, based on these statements in the preamble to the interim final rule on page 21315 I was taking acquisition to not include purchase loans but new development. Thoughts?

The agencies are excluding transactions for acquisition, development, and construction of real estate because these loans present heightened risks not associated with financing existing real estate.

Transactions for acquisition, development, and construction of real estate are being 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.

Well, it does say that, but that is not really how it was written in the regulations - the deferral was added to the section addressing any transaction that requires a certified or licensed appraisal.

Might be time for a call to your EIC and get their take on it - but you could be correct. The term "acquisition" is not otherwise defined in the regulation.
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Section 34.43 is amended by adding 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 acquisition, development, and construction of real estate.

Thanks Randy. I do have a call into the FDIC and I'll share what I learn.

And, after I posted I got an email to call the FDIC and she confirmed my thinking was correct. She stated a footnote was dropped which explained a little better than the lines in the preamble I referred to earlier which referenced a line in the call report: if the loan is for acquisition of vacant land, development of that land or construction it cannot be deferred. I specifically asked about loans for purchasing an existing dwelling and those appraisals can be deferred.

Well isn't that special

Dave, you are special - Regulators RARELY put an interpretation in an e-mail, usually by phone with instructions not to tape the call.

Oh, not special at all. The email response I got was to give them a call to discuss. The usual disclaimers followed.