00-6429. Streamlining of Regulations for Real Estate and Chattel Appraisals; Correction

AGENCY:

Farm Service Agency, USDA.

ACTION:

Correcting amendments to final rule.

SUMMARY:

This document contains corrections to the final regulations which were published in the Federal Register on Wednesday, November 17, 1999, (64 FR 62566-62569). The final rule removed administrative provisions and moved the regulations regarding appraisals pertaining to the Farm Service Agency's Farm Loan Programs from Chapter XVIII to Chapter VII.

DATE:

Effective on March 17, 2000.

FOR FURTHER INFORMATION CONTACT:

Chris L. Greenwalt, Senior Loan Officer, Program Development and Economic Enhancement Division, USDA/FSA/PDEED/STOP 0521, 1400 Independence Avenue, S.W., Washington DC 20250-0521, telephone [phone], facsimile [phone], e-mail: chris—[e-mail].

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the subject of these corrections removed administrative provisions and clarified the requirement that Agency real estate appraisals must comply with the guidelines and standards contained in the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, the requirement that specific Agency formats be used when completing appraisals was eliminated.

Need for Correction

As published, the final rule (64 FR 62566-62569) contains several errors which may prove to be misleading if not corrected. Section 761.7 is being corrected to clarify that its general requirements apply to direct loan appraisals and all appraisal reviews. Guaranteed loan appraisals will still be governed by part 762. Section 762.127 is being amended accordingly.

Section 761.7 also needs to be corrected with regards to when an existing real estate appraisal will be used. The Agency inadvertently failed to address the situation where an appraisal is over 12 months old but has been updated by the same appraiser or appraisal firm within the previous 12 months in accordance with USPAP. In such case, the existing updated real estate appraisal may be used to make or service a loan.

List of Subjects

7 CFR Part 761

• Accounting
• Accounting servicing
• Loan programs—Agriculture
• Real property—Appraisals
• Rural Areas

7 CFR Part 762

• Agriculture
• Loan programs—Agriculture

Accordingly, 7 CFR parts 761 and 762 are corrected by making the following correcting amendments:

PART 761—GENERAL AND ADMINISTRATIVE

1. The authority citation for part 761 continues to read as follows:

Authority: 7 U.S.C. 1989.

2. Revise paragraphs (a) and (d) of § 761.7 to read as follows:

§761.7

Appraisals

(a) General. This section describes requirements for:

(1) real estate and chattel appraisals made in connection with the making and servicing of direct Farm Loan Program and nonprogram loans; and,

(2) appraisal reviews conducted on appraisals made in connection with the making and servicing of direct and guaranteed Farm Loan Program and nonprogram loans.

* * * * *

(d) Use of an existing real estate appraisal. The Agency may use an existing real estate appraisal to reach a loan making or servicing decision under either of the following conditions:

(1) The appraisal was completed within the previous 12 months and the Agency determines that:

(i) The appraisal meets the provisions of this section and the applicable Agency loan making or servicing requirements, and

(ii) Current market values have remained stable since the appraisal was completed; or

(2) The appraisal was not completed in the previous 12 months, but has been updated by the appraiser or appraisal firm that completed the appraisal, and both the update and original appraisal were completed in accordance with USPAP.

* * * * *

PART 762—GUARANTEED FARM LOANS

4. The authority citation for part 762 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480. 5. Revise paragraph (d) of § 762.127 by adding the following at the end of the introductory text:

§762.127

Appraisal requirements.

(d) * * * Agency officials may accept an appraisal that is not current if there have been no significant changes in the market or on the subject real estate and the appraisal was either completed within the past 12 months or updated by a qualified appraisal if not completed within the past 12 months.

* * * * *

Signed in Washington, D.C., on March 7, 2000.

Parks Shackelford,

Acting Administrator Farm Service Agency.