Comments Due January 8, 1998
To All Bank Holding Companies and Others Concerned in the Second Federal Reserve District:
The following is based on a statement by the Board of Governors of the Federal Reserve System:
The Federal Reserve Board has requested comment on a proposed amendment to its Appraisal Regulation for bank holding companies to exempt any transaction involving the underwriting or dealing of mortgage-backed securities from the Board's appraisal requirements.
Comment is requested by January 8, 1998.
The proposed amendment would permit a bank holding company or a nonbank subsidiary of a bank holding company with the authority to underwrite or deal in mortgage-backed securities to do so without demonstrating that the loans underlying the securities are supported by appraisals at origination that meet the Board's appraisal requirements.
As the proposal notes, the Board believes the public rating or due diligence that the market requires for mortgage-backed securities provides information that is sufficient for assessing risks without requiring new appraisals for the underlying loans.
Additionally, the Board is delegating to the Director of the Division of Banking Supervision and Regulation the Board's existing authority to determine for an individual transaction that the services of an appraiser are not necessary in order to protect Federal financial and public policy interests in real estate-related financial transactions or to protect the safety and soundness of the institution.
This delegation of authority is effective December 9, 1997, and is intended to aid in the efficient processing of requests for individual exemptions from the Board's appraisal regulation.
The Board's proposal on this matter, together with the related delegation of authority, as published in the Federal Register of December 9 is available as a file (pdf - 14kb). Comments should be submitted by January 8, 1998, and may be sent to the Board, as specified in the proposal, or, at this Bank, to Maureen LeBlanc, Bank Supervision Officer.