New Rule: Banks can now close on mortgages WITHOUT Appraisals

[Franky Aikens]

One of the greatest cons of real estate is the lack of liquidity. In this time of crisis, liquidity is what many households and businesses need right now. 

In an attempt to supercharge real estate deal timelines and liquidity, The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency have announced changes that will allow commercial and residential mortgage closings to happen WITHOUT an appraisal. Basically circumventing the bottleneck appraisal process that usually holds up deals. 

Appraisal delays are even more pronounced during the COVID pandemic. The new rule allows for the appraisal to be done up to 120 days after the deal has closed.

The rule only applies to banks that keep the loans in their book and are under the oversight of Fed, FDIC, and OCC.

What are you thoughts on the pros and cons of this new rule?

reference: https://www.housingwire.com/articles/banks-will-soon-be-able-to-postpone-some-appraisals-until-120-days-after-a-mortgage-closes/