FDIC COVID Operational 11 – Interior Inspection Alternatives. What alternative options are available in lieu of obtaining an interior inspection for real estate secured loans due to concerns related to COVID-19?

Compliance > COVID & Pandemic-Related
Q:   Real Property Inspections. How should financial institutions respond to COVID-19 related issues relative to inspections of real property?
 
A:   Responses to COVID-19 related questions provided by The Appraisal Foundation note that the Uniform Standards of Professional Appraisal Practice (USPAP) address situations where access to the interior of a property may not be feasible. USPAP permits an appraiser to make an extraordinary assumption about the interior of a property due to health concerns or other emergency conditions, such as the COVID-19 pandemic. Appraisers may have a variety of reasonable bases for an extraordinary assumption, including, but not limited to:
  • Determining an interior inspection is not needed because the appraiser has a reasonable basis for an extraordinary assumption and its use still results in a credible analysis.
  • Having conducted a prior inspection of the property in the recent past.
  • Obtaining an affidavit and/or pictures from the borrower regarding the interior.
 
 
This Q&A was contained in the Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) – As of March 3, 2021 (which may be updated from time to time).  This may be found on the FDIC’s website here:  https://www.fdic.gov/Coronavirus/faq-fi.pdf.
 

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