To All Depository Institutions and Others
Concerned in the Second Federal Reserve District:

The Federal Reserve and the other federal financial institutions regulatory agencies have jointly issued a FAQ (frequently asked questions) on appraisal regulations and lending requirements when financing residential construction in a tract development.

FAQ topics include

• definition of residential tract development, including clarification on a residential unit and pre-sold unit,
• appraisal requirements for residential tract development, raw land, residential lots and condominium buildings,
• clarification on loan amount and collateral value for purposes of calculating the loan-to-value ratio for residential tract development loans,
• acceptable use of an appraisal of a model home,
• underwriting characteristics of a revolving line of credit in which a borrowing base sets the availability of funds to the borrower, and
• appraisal requirements for transactions financing the construction of single-family homes in a residential tract development.

Federal Reserve notice SR 05-14
FAQ

Contact:
Caroline T. Frawley
Vice President
Risk Management
(212) 720-1215
caroline.frawley@ny.frb.org

Contact:
Public Affairs
(212) 720-6130
general.info@ny.frb.org