November 30, 2012

Mr. Jim Park

Executive Director

Appraisal Subcommittee

H Street NW., Suite 760

Washington, DC 20005

Re: Proposed ASC Policy Statements

Dear Mr. Park: 

On behalf of the 23,000 designated, candidates and affiliate members of the Appraisal Institute, we thank you for 

the opportunity to comment on the draft Policy Statements of the Appraisal Subcommittee. 

Generally, we are puzzled that the ASC has chosen not to undertake the formal rulemaking process where 

Congress specifically granted authorization, including complex and extremely important areas of enforcement, 

reciprocity and temporary practice. We believe that these issues would benefit from the formal advisory 

committees to be established by the ASC when undertaking a formal rulemaking. Further, we believe that the 

ultimate outcome would benefit from a thorough vetting of the issues. We urge the ASC to adopt Policy 

Statements in the areas not authorized by Dodd-Frank, and to commence formal rulemakings in the areas of 

enforcement, temporary practice and reciprocity. 

We also are concerned about the selective basis for which Title XI is being interpreted and enforced by the ASC 

through its Policy Statements. On the one hand, the ASC apparently believes that it does not have the authority to 

require states to undertake certain policies, while on the other hand, the ASC has embraced the broadest 

interpretation possible, attempting to require states to establish certain policies where there is no authorization or 

authorizations were intended to address different issues. State appraisal boards, users of appraisal services, and 

professional appraisers deserve more than selective interpretation of Title XI appraisal requirements. We urge the 

ASC to revise the Policy Statements to be consistent with the Title XI and Dodd-Frank authorizations and to 

refrain from “activist” policymaking. 

We have specific comments for each Policy Statement, which are found below, as follows:

Policy Statement 1  Statutes, Regulations, Policies and Procedures Governing State Programs

We long have been concerned about the way in which the ASC has interpreted Section 1122(d) of Title XI related 

to professional appraisal designations. This provision prohibits a federally regulated financial institution from 

excluding an appraiser from consideration for an assignment solely by virtue of a membership or lack of 

membership in a particular organization. This is a miscellaneous provision from Title XI that is directed to the 

federal financial institutions regulatory agencies, Fannie Mae and Freddie Mac, related to appraiser hiring 

policies, not policies related to the operations of state appraisal regulatory agencies. While the ASC is authorized 

under Section 1103 to monitor the requirements established by the Federal financial institutions regulatory

agencies, with respect to appraisal standards and certification requirements, we see no direct authorization for the 

ASC to apply this provision to state appraiser regulatory agency operations. This is not to say that we support an 

unequal playing field at any level; rather we do not believe that this provision is authorized by Congress. As in 

other areas of the draft Policy Statement where it apparently does not feel it has sufficient authorization, we urge 

the ASC to not include this interpretation in the final Policy Statements. 

Further, from a public policy standpoint, we urge the ASC to reconsider the draft policy prohibiting states from 

specifying education providers in consent agreements that require additional education. To this point, we believe 

that state appraiser regulatory agencies deserve and/or need the flexibility to be able to mandate that appraisers 
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who are being sanctioned by the agency take specific courses or other educational programs that the agency 

knows will rectify the issue that resulted in the appraiser being sanctioned in the first place. It is not sufficient for 

an agency to only be allowed to require an appraiser to “take a course in green valuation.” Rather, the agencies 

should be permitted to mandate that an appraiser take a course that the agency knows will result in the appraiser 

receiving training in the problem area. 

Policy Statement 1 also encourages states to consider Appraisal Standards Board Advisory Opinions, Frequently 

Asked Questions, and other written guidance issued by the ASB regarding the interpretation and application of 

USPAP. The USPAP AOs and FAQs are voluntary guidance documents – they are not part of USPAP. As such, 

they should not to be used as the basis for enforcement action. We urge the ASC to include a clarifying statement 

to this effect in the final Policy Statement. We also believe that it would be useful for the ASC to clarify that any 

materials developed by the Appraisal Standards Board also are voluntary guidance and are NOT to be used by 

any state appraiser regulatory agency as the basis for an enforcement action. 

Policy Statement 2  Temporary Practice

Language currently found in Policy Statement 5 (Temporary Practice), related to employees of financial 

institutions who perform “technical reviews” that do not result in the development of an opinion of value, was not 

carried over to the draft Policy Statement 2. According to the Policy Statement, “The ASC believes that text is 

outdated and unnecessary.” 

Currently, Policy Statement 5 says that, for federally related transactions, states generally cannot require 

reviewers who do not develop an opinion of value to be credentialed in the state where the property is located, 

unless the review is conducted in the state where the property is located. However, the rewrite of the ASC Policy 

Statements removes this statement from Policy Statement 5. The new Policy Statements are silent on the issue 

of credentialing appraisal reviewers. It is likely that the omission of this clarification from the Policy Statements will 

result in numerous states moving to require that all reviewers of appraisals of subject properties that are located 

in their state must obtain an appraiser credential from their agency. 

As the ASC is aware, this policy change to not prohibit states from requiring licensure for technical reviews will, 

among other things, have a dramatic impact on many financial institutions that have spent considerable time and 

money investing in an appraisal review infrastructure based, in part, on the current Policy Statement. We find it 

unfortunate that the ASC has failed to offer any justification for this significant policy change in the draft Policy 

Statement, and we believe that such a failure will cause many institutions unnecessary harm from an 

organizational planning standpoint. Further, we suspect that many employees of financial institutions will agree 

that the policy was “outdated” or “unnecessary,” as the ASC has claimed. 

It appears as if the ASC does not believe that it has the authority to adopt a policy such as is currently found in 

Statement 5 under its statutory authority contained in Title XI. At a minimum, the ASC should provide justification 

for this significant policy change. 

Beyond this concern, we support the proposal to define excessive fees and policies for obtaining a temporary 

practice permit. In particular, we support the $250 temporary fee cap and the six-month validation period for 

temporary practice permit holders. We urge retention of these provisions in the final Policy Statement 2. 

Additionally, we request that the ASC include an additional limitation related to states requiring applicants of 

temporary practice permits to submit copies of engagement letters or copies of completed appraisals. We are 

aware that some state appraiser regulatory agencies have enacted such requirements for applicants for 

temporary practice permits. Identification of the physical address of the assignment may be appropriate, but

requiring identification of the client and the submission of a full copy of a completed appraisal is excessive and 

may present complications with confidentiality for the appraiser and his/her client. This is particularly true if such 

information is available via Freedom of Information Act requests. 

We have heard of instances where copies of information submitted as part of an application for a temporary 

practice permit, specifically the client name and property address, has been provided to other, in-state appraisers,

who then contact the client and attempt to inappropriately compete with the out-of-state appraiser. As such, we 
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strongly encourage the ASC to prohibit state appraiser regulatory agencies from requiring that appraisers submit 

this information as part of an application for a temporary practice permit. 

Policy Statement 3  National Registry

We have a general concern with the way that state appraiser regulatory agencies are required to provide 

information on disciplinary actions to the National Registry. Currently, once an appraiser has been charged with 

a violation, their name is “tagged” on the National Registry. We believe that the original intent of immediate public 

notification was that the lender community had to be protected from unethical or incompetent appraisers. 

However, members who are involved in reviewing disciplinary actions against appraisers are sometimes finding 

that many charges are unsubstantiated, minor violations, or even without merit. These charges sometimes have 

the effect of ruining an appraiser‟s career. 

For example, recently, a minor violation, such as not completing a state‟s continuing education on time (a charge 

later found to be false), was enough for an appraiser to be barred from appraising for several clients until the state 

agreed that the education had been completed on time (but reported incorrectly). This process took several 

months. We believe that state appraiser regulatory agencies should be prohibited from reporting appraiser 

standard or ethical violations until the accused has exhausted any appeals that might be available after having 

been convicted by the appropriate agency, and we further urge inclusion of such a policy in the final Policy 

Statement 3. 

Beyond this, we note that the programs administered by the ASC under Policy Statement 3 are largely outdated 

and outmoded. We note that the ASC is utilizing an “extranet” system that appears to be widely out of the date,

from a technological standpoint, and antiquated for the purpose of sharing information among agencies. Further, 

systems such as the National Mortgage Licensing System (NMLS) are paving the way for the future of 

professional oversight and regulation with real-time data-sharing among state agencies. Such systems are far 

more user-friendly for state regulatory officials and more effective at information-sharing across state lines. We 

see systems such as the NMLS as the way of the future.

Policy Statement 4  Application Process

The draft Policy Statement 4 maintains prohibitions of the use of affidavits for qualifying education, but extends 

the prohibition to upgrade applications. Barring documented abuse of the use of affidavits in upgrade applications, 

we see no reason not to accept affidavits, so long as states have a validation process in place. As such, we 

support upgrade applications being treated similarly to renewal applications and encourage the ASC to accept 

such a process for upgrades in the final Policy Statement. 

Further, we believe that states should be allowed to accept signed certifications by appraisers seeking to upgrade 

or renew, in addition to formal affidavits. The affidavit process adds unnecessary red tape to the process of 

upgrading or renewing by appraisers, as state appraiser regulatory agencies already may revoke a credential for 

falsifying information. 

Policy Statement 5 – Reciprocity

Generally speaking, we support consistent reciprocity policies that promote commerce and reduce unnecessary 

red tape on practicing appraisers. At the same time, we acknowledge that the complexities of promoting such a 

system in the “federal” system found in the United States. Still, the ASC has vast authority in this area, both in 

terms of writing policy statements and also in potential formal rulemaking, which was granted to the agency under 

the Dodd-Frank Act. Reciprocity is one area for which we believe formal rulemaking in support of consistent 

reciprocity requirements to support commerce is warranted. We do not believe that the ASC has accurately 

interpreted the spirit of the Dodd-Frank Act, as it relates to reciprocity. 

In Policy Statement 5, the revised policy proposes that States must only have a reciprocity policy in place for 

issuing a reciprocal credential to an appraiser from another State. A State may have a more lenient or more opendoor policy; however, a State cannot impose additional requirements on applicants for reciprocal credentials than 

are imposed on their own licensees. By merely requiring that states have a policy in place, states could simply 
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say that it is their position that no state has credentialing requirements that meet or exceed theirs and, as such, 

they are not going to grant a reciprocal credential to an appraiser from any state. This type of a policy would meet 

the ASC requirements, but certainly would not be in the spirit of the Dodd-Frank Act. Our interpretation of the 

Dodd-Frank Act requirement is that a state MUST grant a reciprocal credential to an appraiser who holds a 

credential in good standing, conferred by a state that has been found to be in compliance with the AQB 

requirements. Unfortunately, ASC policy still will permit states to deny the issuance of a reciprocal credential 

based upon the receiving state having superior credentialing requirements than the sending state. 

In addition, States would not be required to grant a reciprocal credential to an appraiser credentialed in another 

State with a current ASC Finding of „„Poor.‟‟ Here, we believe that the ASC should reconsider allowances for 

states that have been graded “Not satisfactory,” as findings such as “State does not meet all Title XI mandates,” 

“Deficiencies present a significant risk,” and “Substantial risk of Program failure” do not appear to warrant 

acceptance by other states.

Further, we have concerns with the following statement found in one of the illustrations: 

STATE A would evaluate STATE Z’s credentialing requirements as they currently exist to determine 

whether they meet or exceed STATE A’s current requirements for credentialing.

This appears to require each state to evaluate every other state to determine whether or not the other state‟s 

requirements meet or exceed the receiving state‟s requirements. Some states likely are not capable of making 

such a judgment, or may look to the ASC for guidance in this area. As such, we support the ASC helping states 

make such determinations upon written request. Further, we can envision scenarios where some states may 

enact protectionist requirements simply to say that another state‟s requirements don‟t meet or exceed their own 

requirements, thus, allowing them to deny reciprocity to appraisers from that state. We do not believe that is 

consistent with the goal of promoting the “reasonably free movement of credentialed appraisers across State 

lines.”

Policy Statement 6 – Education

In relation to “Course Approval,” the draft Policy Statement states that States should ensure that educational

providers are afforded equal treatment. A footnote states that: 

Consent agreements requiring additional education may not specify a particular course provider, thereby 

discriminating against other providers on the State’s approved course listing offering the same course.

In our view, there is no nexus between Course Approval and education-related consent agreements with 

individual appraisers who are subject to disciplinary action by the state agencies. As such, this footnote has no

place in an ASC Policy Statement related to course approval. We urge that this reference and provision be struck 

from the final Policy Statement. 

Similar to the ASC‟s current policy related to technical reviews, we do not believe that the ASC has the legal 

authority to prohibit states from imposing a specific education requirement for disciplinary purposes. Title XI 

allows states to enact requirements that exceed Title XI requirements. Such a requirement would be an example 

of a state exceeding minimum requirements in the area of remedial education. 

Should the ASC ignore this request, and implement a policy that prohibits states from imposing requirements that 

appraisers satisfy specific educational requirements, we believe that the Policy Statement should include an 

exception in cases where there is only one course provider in the state that offers a course in the subject matter 

that is in need of redress. 

Policy Statement 7 – Enforcement

The Policy Statement related to Enforcement states that “Persons analyzing complaints for USPAP compliance 

must be knowledgeable about appraisal practice and USPAP.” Given that most of the concerns that prompted 

Congress to enact additional Dodd-Frank appraisal amendments relate to concerns regarding enforcement by the 
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ASC and state appraisal boards, we do not believe that this requirement is adequate. The ASC should mandate 

that such individuals analyzing complaints for USPAP compliance be certified or licensed real estate appraisers, 

at a minimum, and that the conduct of any review of an appraisal be done in accordance with USPAP. In addition, 

reviewers must be competent to review the complaint under review. Complaints involving Certified General Real 

Property Appraisers should not be reviewed by Certified Residential Real Property appraisers. Further, individuals 

analyzing complaints must comply with USPAP in their analysis, especially when the assignments involve a value 

opinion. Lastly, we believe that reviewers should be required to take continuing education for review appraisal and 

be required to complete and pass a 15-hour USPAP within the USPAP update cycle. 

Policy Statement 8  Interim Sanctions

The entire direction of the Interim Sanctions Policy Statement completely misses the mark, in our opinion. 

The intent of Section 1473(k) of the Dodd-Frank Act is two-fold. First, the ASC is given the authority to remove a 

State licensed or certified appraiser or appraisal management company from the National Registry on an interim 

basis, not to exceed 90 days, pending State agency adjudication of a disciplinary action against the appraiser. 

Second, the ASC is given the authority to impose interim sanctions on the state agencies themselves that have

been found to have deficient appraiser regulatory programs. These interim sanctions are in advance of the 

ultimate de-recognition of a State agency. 

These two provisions – the ability to sanction an appraiser on an interim basis and the ability to sanction a state 

on an interim basis – are separate and apart from one another. 

Unfortunately, comments made by representatives of the ASC at a recent meeting of the Association of Appraiser 

Regulatory Officials totally and completely disregarded the authority granted to the ASC to remove an appraiser 

who is the subject of a state disciplinary action from the National Registry for a period not to exceed 90 days. 

This is an important provision and is designed to prevent bad appraisers from continuing to operate, even though 

they may be the subject of a disciplinary action for a serious violation of the State appraiser regulations. In 

addition, the possibility of a state imposing an interim sanction against an appraiser is also intended to encourage 

appraisers to resolve their cases in a speedy manner. Unfortunately, the comments made by the ASC tied the 

removal of an appraiser from the National Registry on an interim basis to actions that are being taken against the 

state agency for deficiencies in the appraiser regulatory program. This is not correct.

As drafted, revised Policy Statement 8 does not contain any references to what steps a state appraiser agency 

must take to remove an appraiser who is the subject of a disciplinary action from the National Registry for the 

permitted 90-day period. We strongly urge the ASC to revise Policy Statement 8 to include provisions related to 

the interim sanctions that can be imposed against appraisers who are the subject of state disciplinary action. 

The idea of this section of the Dodd-Frank Act is that the interim sanctions could be imposed on a state while a 

more detailed investigation and “due process” action was undertaken to impose more severe sanctions, currently 

known as the “atomic bomb” or de-certification of a state appraiser regulatory agency. As it is currently drafted, it 

would be virtually impossible for the ASC to actually impose an interim sanction. Specifically, Policy Statement 8 

would take a minimum of 180 days to impose an interim sanction. Then the state agency would be allowed 

judicial review of the ASC‟s decision. The due process requirements that would be necessary in order to impose 

an interim sanction make the whole idea of an interim sanction completely moot. 

In addition, revised Policy Statement 8 does not outline what interim sanctions the ASC would have at its disposal 

to impose against a state appraiser regulatory agency. What are the options that the ASC has at its disposal?

Fines? Requirements for Board members to take additional education? Temporary or permanent replacement of 

the head of a state regulatory agency? Hiring of temporary staff to clear backlogs of applications, renewals or 

complaints? Policy Statement 8 is unclear concerning what options the ASC has at its disposal. Clarification is 

required.

The ASC has shown historical reluctance to issue sanctions against a “sovereign” state. Rather than issue a 

misguided Policy Statement that will result in further inaction, we suggest that the ASC undertake a formal 
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rulemaking in this area that would issue monetary fines and other penalties against states that fail to comply with 

Title XI mandates. 

Appendix A – Compliance Review Process

We commend the ASC for developing a detailed matrix illustrating the revised program compliance review 

process. One item that we believe deserves definition or elaboration is the term “Program Failure.” This term is 

found in the rating criteria but not within any of the Policy Statement and carries no definition. Such a definition 

appears essential for establishing some context for the rating system. 

Thank you for the opportunity to comment on the proposed Policy Statements. If you have any questions or 

require additional information, please contact Bill Garber, Director of Government and External Relations, at 202-

298-5586 or bgarber@appraisalinstitute.org. 

Sincerely, 

//c

Appraisal Institute