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.
Caroline T. Frawley