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ALEXANDRIA, Va. – The NCUA along with other federal financial institution regulatory agencies that are part of the Federal Financial Institution Examination Council, has granted a waiver of appraisal regulations for three years to credit unions entering into real estate-related transactions with borrowers affected by Hurricanes Katrina and Rita. According to NCUA’s November 2005 Letter to Credit Unions No.: 05-CU-17, the waiver permits exceptions to appraisal requirements under 12 CFR Part 722 “regarding transactions involving real property in major disaster areas when the exceptions would assist credit unions in responding to the financial needs of members affected by the Hurricanes.” The waiver covers transactions for real estate located in certain Alabama, Mississippi and Texas counties and Louisiana parishes that have been designated by FEMA as major disaster areas qualifying for special consideration as a result of the Hurricanes. Exceptions for the major disasters declared due to Hurricane Katrina will expire on Aug. 29, 2008 in Alabama, Mississippi and Louisiana, and for Hurricane Rita on Sept. 24, 2008 in Louisiana and Texas. The NCUA Letter to Credit Unions explains that to qualify for the waiver, a credit union needs to document that: (1) the transaction involves real property located in the designated disaster area; (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 credit union’s involvement in the transaction. The letter further states that, “Whether or not a credit union elects to take advantage of this waiver is a business decision that may be determined by the credit union on a case-by-case basis. When a credit union decides to rely on the appraisal waiver for a particular real estate-related transaction, the credit union should provide sufficient documentation in the loan file to support its credit decision and assessment of the collateral’s value.” It continues to state that “Credit unions should continue to extend credit on terms that are consistent with safe and sound lending principles, and such transactions will be reviewed by NCUA staff during the course of routine safety and soundness examinations.” In addition to the NCUA, the other FFIEC member agencies include: Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and the Office of Thrift Supervision. -

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