CONSUMER MORTGAGE COALITION

INDEPENDENT COMMUNITY BANKERS of AMERICA

November 29, 2012

James R. Park

Executive Director Appraisal Subcommittee of the

Federal Financial Institutions Examination Council 1401 H Street N.W., Suite 760 Washington, D.C. 20 005

Re: Proposed Policy Statement Amendments

Docket No. AS12

- 16

Dear Mr. Park:

The undersigned trade associations appreciate the opportunity to comment on the Appraisal Subcommittee’s (“ASC”) proposed amendments to its Policy Statements

, which would implement some amendments the Dodd

- Frank Wall Street Reform and

Consumer Protection Act (the “ Dodd

- Frank Act”) made to the Fi n ancial Institutions Reform, Recovery, a n d Enforcement Act of 1989 ( “ FIRREA”)

. The proposal would also

reflect the A SC ’s implement ation of its revised Compliance Review process in 2009.

At the outset, we appreciate the A SC’s extension of the public comment period. The mortgage industry has been submitting a large number of comment letters in the past several weeks, some of which we re complex and lengthy. The extension enabled us to

submit more meaningful comments both to the ASC and in the many mortgage rulemakings

.

T he Dodd

- Frank Act amended FIRREA , in part

, to require the Appraisal Subcommittee to monitor each State appraiser ce rtifying and licensing agency to determine whether the agency’s policies, practices, and procedures are consistent with the purposes of maintaining appraiser independence, and whether the State has adopted and maintains effective laws, regulations, and pol icies aimed at maintaining appraiser independence. 1
The Proposed Policy Statements are designed to support the ASC’s important role in maintaining appraisal independence and quality, and w e generally support the m . We do

co mment on the reciprocity aspect s of the proposal, and suggest a technical clarification

.

Reciprocity Should Be Based on Compliance with ASC Requirements

Congress required reciprocity to be available, consistent with appraisal quality. The

Dodd

- Frank Act requires states to adopt recipr ocity policies, as follows:

1 12 U.S.C. § 3351(g).2 “a federally related transaction shall not be appraised by a certified or licensed appraiser unless the State appraiser certifying or licensing agency of the State certifying or licensing such appraiser has in place a policy of issuing a reciprocal

certification or license for an individual from another State when

— (1) the appraiser licensing and certification program of such other State is in compliance with the provisions of this title; and

(2) the appraiser holds a valid cert ification from a State whose requirements for certification or licensing meet or exceed the licensure standards established by the State where an individual seeks appraisal licensure.” 2

Proposed Policy S tatement 5 would have State s make the determin ation s of whether one State’s requirements meet or exceed those of another State . It is not clear how States

c ould do this accurately and in a timely manner

. It also would permit States to deny reciprocity to an appraiser from a State that is in full complianc e with all ASC requirements , which would interfere with the purpose of reciprocity

. We suggest that reciprocity should be permitted t o appr aisers credentialed in a state that is in compliance with ASC requirements. Alternatively , we recommend that the A S C make the “meet or

exceed” determinations and maintain a current list on which States and lenders could rely.

Review Appraisers Should Not Need to be Credentialed in the State Where the Property

is Located

Existing Policy Statement 5 provides:

Finall y, some State agencies have sought to require that an appraiser register for temporary practice if the appraiser is certified or licensed in another State, performs a technical review of an appraisal in that other State and changes, or is

authorized to cha nge, a value in the appraisal. The ASC, however, has concluded that for federally related transactions the review appraiser need not register for temporary practice or otherwise be subjected to the regulatory jurisdiction of the State agency in which the appraisal was performed, so long as the review appraiser does not perform the technical review in the State within which the property is located.

The Proposed Policy Statements do not contain similar language. The ASC explains that this language is “outd ated and unnecessary.” 3 The Proposed Policy Statements do not appear to apply their reciprocity provisions to review appraisers. The result appears to be

that review appraisers would need to be credentialed in the state where the property is

located in a ll instances. We believe this is unnecessary and that it would increa se costs to
consumers without a benefit.

2 12 U.S.C. § 3351(b).

3 77 Fed. Reg. 52721, 52723 (August 30, 2012).3 Any appraisal review occurs only after a properly credentialed appraiser performs the actual appraisal. Requiring the appraisal to be perform ed , not reviewed, by a qualified appraiser is the purpose of FIRREA’s appraisal requirements:

“The purpose of this chapter is to provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to e ffective supervision.” 4

An appraisal performed by a properly qualified appraiser meets this purpose. Requiring any person who reviews the appraisal to meet the requirements of the state where the property is located would be excessive. This would mean l enders would need to employ additional appraisers from more states, or would need to retain them on a loan

- by

- loan basis and pass the appraisers’ charges through to consumers.

We urge clarification that a review appraiser does not need to be credentiale d in the state where a property is located, as long as the review appraiser is proper l y credentialed in the

state where the review occurs. The actual appraiser would meet the state’s requirements.

Alternatively, we recommend that review appraisers who ar e employed by financial institutions regulated by one of the FFIEC member agencies be per se qualified to perform appraisal reviews.

Technical Clarification Request

The Dodd

- Frank Act limited the definition of “State licensed appraiser” to appraisers

li cens e d in a state whose licensing criteria meet or exceed the minimum criteria issued by the Appraisal Qualifications Board (“AQB”) of The Appraisal Foundation for licensing real estate appraisers. 5 Proposed Policy Statement 3 states:

Only AQB

- compliant certified appraisers in active status on the National Registry are eligible to perform appraisals in connection with federally related transactions. In order for a licensed appraiser to be listed on the National Registry as AQB

compliant, that individual must satisfy requirements for licensing in a State whose criteria meet or exceed AQB Criteria. Beginning July 1, 2013, only AQB

compliant licensed appraisers in active status on the National Registry are eligible to perform appraisals in connection with f ederally related transactions. 6

The first and last quoted sentences seem to contradict each other, first stating that only certified appraisers may appraise properties in federa lly

- related transactions, then that only licensed appraisers may do so. The a pparent intent is to clarify that , beginning July

4 12 U.S.C. § 3331.

5 12 U.S.C. § 3345(c).

6 77 Fed. Reg. 52721, 52727

- 28 (August 30, 2012).4 1, 2013, trainee appraisers and apprentice appraisers that are not licensed may not perform appraisals for federally

- related transactions. It might be clear er to say that directly

.

Conclusion

We appreci ate the ASC’s consideration of our comments. We suggest that the final Policy Statements support reciprocity.

Sincerely,

Consumer Mortgage Coalition Independent Community Bankers of America