The COVID-19 pandemic has created a unique environment for real estate investing. Read on to learn more about three temporary rules for property purchased during the pandemic.
1. Coronavirus Protection Clause
Many real estate agreements now include a “COVID-19 Addendum” that gives buyers and sellers the right to cancel the contract and/or allows extensions of time. Homebuyers seeking financing are protected in case of unexpected loss of income under a standard “mortgage contingency” clause, however, a cancellation clause offers greater safeguards.
2. Appraisals
Under a temporary federal ruling issued on March 18, 2020, mortgage lenders can approve your loan without a standard property appraisal. The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are providing this temporary relief to allow regulated institutions to extend financing to creditworthy households and businesses quickly in the wake of the national emergency declared in connection with COVID-19.
The agencies are deferring certain appraisals and evaluations for up to 120 days after closing of residential or commercial real estate loan transactions. Transactions involving acquisition, development, and construction of real estate are excluded from this interim rule. These temporary provisions will expire on December 31, 2020, unless extended by the federal banking agencies.
3. · Free Credit reports
Federal regulations allow consumers the right to obtain a free copy of their credit report annually. Due to the pandemic, free credit reports can be obtained weekly instead of annually. The temporary rule runs through April 2021.
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