This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

96912 

Vol. 89, No. 235 

Friday, December 6, 2024 

1 12 U.S.C. 3332(a)(5), uses the term ‘‘State 

Appraiser Regulatory Agencies.’’ As discussed 

further below, for purposes of the proposed rule, 

this term is synonymous with ‘‘State appraiser 

certifying and licensing agency’’ as defined in 

section 1121(1) of Title XI (12 U.S.C. 3350(1)). 

2Public Law 111–203, sec. 1473, 124 Stat. 2190– 

2199 (2010). 

3 12 U.S.C. 3332(a)(1)(A). 

4Federally related transaction refers to any real 

estate-related financial transaction which: (a) a 

Federal financial institutions regulatory agency 

FEDERAL FINANCIAL INSTITUTIONS 

EXAMINATION COUNCIL 

12 CFR Part 1102 

[Docket No. AS24–22] 

RIN 3139–AA01 

Appraisal Subcommittee Enforcement 

Authority Regarding the Effectiveness 

of State Appraiser and Appraisal 

Management Company Regulatory 

Programs 

AGENCY: Appraisal Subcommittee, 

Federal Financial Institutions 

Examination Council. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Appraisal Subcommittee 

(ASC) of the Federal Financial 

Institutions Examination Council invites 

comment on a proposed rule to 

implement a framework to govern the 

ASC’s enforcement authority regarding 

the effectiveness of Appraiser and 

Appraisal Management Company (AMC) 

Programs overseen by State Appraiser 

Regulatory Agencies. The proposed rule 

would codify the existing compliance 

review process with modifications. The 

proposed rule would require an analysis 

to assess program effectiveness, outline 

requirements for maintaining effective 

programs, and authorize the ASC to 

bring enforcement actions against such 

agencies that fail to maintain effective 

programs. 

DATES: Send comments on or before 

February 4, 2025. 

ADDRESSES: Commenters are strongly 

encouraged to submit comments 

through the Federal eRulemaking Portal 

or by email, if possible. You may submit 

comments, identified by Docket Number 

AS24–22, by any of the following 

methods: 

• Federal eRulemaking Portal: 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: webmaster@asc.gov. Include 

the docket number in the subject line of 

the message. 

• Mail: Address to Appraisal 

Subcommittee—FFIEC, Attn: Lori 

Schuster, Management and Program 

Analyst, 1325 G Street NW, Suite 500, 

Washington, DC 20005. 

• Hand Delivery/Courier: Address to 

Appraisal Subcommittee—FFIEC, Attn: 

Lori Schuster, Management and 

Program Analyst, 1325 G Street NW, 

Suite 500, Washington, DC 20005. 

Instructions: All submissions must 

include the agency name and docket 

number for this document. All 

comments and any supporting materials 

or attachments received will be posted 

without change to https://

www.regulations.gov, including any 

business or personal information that 

you provide, such as name and address 

information, email addresses, or phone 

numbers. Commenters should submit 

only information that the commenter 

wishes to make available publicly. 

Please do not enclose any information 

in your comment or supporting 

materials that you consider confidential 

or inappropriate for public disclosure. 

Docket: To read comments regarding 

this proposed rulemaking, go to: https:// 

www.regulations.gov, insert docket 

number AS24–22 in the ‘‘Search’’ box, 

and follow the prompts. You may also 

personally inspect comments at the 

Appraisal Subcommittee’s office, 1325 

G Street NW, Suite 500, Washington, DC 

20005. To make an appointment, please 

contact Lori Schuster at (202) 595–7578 

or lori@asc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Natalie Lutz, Attorney Advisor, 202– 

792–1217, natalie@asc.gov or Matt 

Ponzar, General Counsel, 202–595– 

7577, matt@asc.gov, Appraisal 

Subcommittee, 1325 G Street NW, Suite 

500, Washington, DC 20005. The above 

phone numbers are not toll-free 

numbers. Persons with hearing or 

speech impairments may access these 

numbers by dialing 7–1–1 to access 

telecommunications relay services. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The following section discusses the 

proposed rule’s objectives, the legal 

basis for this proposed rule, background 

information, the reasoning behind 

issuing this proposed rule, and a 

summary of the applicable 

recommendations made by the 

Appraisal Subcommittee Advisory 

Committee for the Development of 

Regulations (ASCAC). 

A. Proposed Rule’s Objectives 

The proposed rule (proposal or 

proposed rulemaking) is intended to 

establish an effective and consistent 

enforcement approach to the Appraisal 

Subcommittee’s (ASC) oversight of State 

Appraiser Regulatory Agencies.1 The 

ASC believes that the proposal would 

significantly improve its effectiveness in 

monitoring and bringing enforcement 

actions against State Appraiser 

Regulatory Agencies that may not have 

effective Appraiser and Appraisal 

Management Company (AMC) 

Programs. The ASC also believes that 

the proposed rulemaking would be 

beneficial in clarifying requirements for 

State Appraiser Regulatory Agencies to 

promote the effectiveness of their 

Appraiser and AMC Programs. Finally, 

the proposed rule would provide 

additional transparency to State 

Appraiser Regulatory Agencies and 

other stakeholders regarding the ASC’s 

procedures for monitoring Appraiser 

and AMC Programs and the potential for 

enforcement actions against State 

Appraiser Regulatory Agencies. In 

general, the proposed rule would codify 

the existing ASC compliance review 

process consistent with the ASC’s 

current practices and processes for 

conducting compliance reviews, with 

some modifications and minor 

corrections. 

B. Statutory Authority 

Title XI of the Financial Institutions 

Reform, Recovery, and Enforcement Act 

of 1989 was amended by the DoddFrank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) in 2010 

(Title XI).2

Section 1103(a)(1)(A) 3 of Title XI 

requires the ASC to monitor 

requirements established by State 

Appraiser Regulatory Agencies for the 

certification and licensing of 

individuals qualified to perform 

appraisals in connection with federally 

related transactions,4 including a code 


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engages in, contracts for, or regulates; and (b) 

requires the services of an appraiser. See 12 U.S.C. 

3350(4). 

5 12 U.S.C. 3332(a)(1)(B). 

6 12 U.S.C. 3347(a). 

7 Id. 

8 Id. (numbering of the program functions is 

added for emphasis). 

9 Id. 

10 12 U.S.C. 3347. 

11 Id. 

12 12 U.S.C. 3335. 

13See H. Rept. 111–94, at 96 (2009). 

14 12 U.S.C. 3335. 

15See Government Accountability Office, GAO– 

03–404, Regulatory Programs: Opportunities to 

Enhance Oversight of the Real Estate Appraisal 

Industry, at 1 and 6 (2003). 

16 12 U.S.C. 3331. 

17The ASC is composed of seven members, each 

designated by the head of a Federal agency (the 

Board of Governors of the Federal Reserve System 

(Board), the Consumer Financial Protection Bureau 

(CFPB), the Federal Deposit Insurance Corporation 

(FDIC), the Office of the Comptroller of the 

Currency (OCC), the National Credit Union 

Administration (NCUA), the Department of Housing 

and Urban Development (HUD), and the Federal 

Housing Finance Agency (FHFA)). See 12 U.S.C. 

3310 and 12 U.S.C. 1708(g)(2). 

18 12 U.S.C. 3332(a)(1)(A). 

19All 50 States, the District of Columbia, and four 

U.S. territories have established Appraiser Programs 

to ensure the availability of licensed and certified 

appraisers and effective supervision of their 

activities. The four territories include Guam, Puerto 

Rico, the Commonwealth of the Northern Mariana 

Islands, and the U.S. Virgin Islands. American 

Samoa does not have an Appraiser Program. 

20The Appraiser Qualifications Board of the 

Appraisal Foundation adopts the ‘‘Real Property 

Appraiser Qualification Criteria’’ (AQB Criteria), 

which establishes the minimum education, 

experience, and examination requirements for the 

licensure and certification of real property 

appraisers and minimum requirements for trainee 

and supervisory appraisers. See AQB Criteria, 

available at https://www.appraisalfoundation.org/ 

imis/TAF/Standards/Qualification_Criteria/ 

Qualification_Criteria__RP_/TAF/AQB_

RPAQC.aspx. 

21 12 U.S.C. 3345. 

22 12 U.S.C. 3332(a)(3). 

23See supra note 2. 

24Public Law 111–203, sec. 1473(f), 124 Stat. 

2191–2192; 12 U.S.C. 3332(a)(1)(B). See supra note 

13 at 97. Presently, 50 States and the District of 

Columbia have AMC Programs. Hawaii’s AMC 

Program sunset on June 30, 2023. However, Hawaii 

House Bill 2641 was signed into law on June 21, 

2024, to reenact the version of the AMC Program 

that was originally part of the Hawaii Department 

of Commerce and Consumer Affairs. The Hawaii 

AMC Program established pursuant to House Bill 

2641 commenced on September 1, 2024. American 

Continued 

of professional responsibility. Section 

1103(a)(1)(B) also requires the ASC to 

monitor the requirements established by 

State Appraiser Regulatory Agencies for 

the registration and supervision of the 

operations and activities of AMCs.5

Additionally, section 1118(a) of Title 

XI requires the ASC to monitor State 

Appraiser Regulatory Agencies to 

determine whether each State Appraiser 

Regulatory Agency: 

(1) has policies, practices, funding, 

staffing, and procedures that are 

consistent with Title XI; 

(2) processes complaints and 

completes investigations in a reasonable 

time period; 

(3) appropriately disciplines 

sanctioned appraisers and AMCs; 

(4) maintains an effective regulatory 

program; and 

(5) reports complaints and 

disciplinary actions on a timely basis to 

the national registries of appraisers and 

AMCs maintained by the ASC.6

Section 1118(a) of Title XI further 

provides that the ASC can impose 

certain sanctions against a State 

Appraiser Regulatory Agency that fails 

to have an effective appraiser regulatory 

program.7 For the purposes of the 

proposed rule, the term ‘‘enforcement 

actions’’ would be used instead of 

‘‘sanctions.’’ In determining whether a 

program is effective, the ASC must 

include an analysis of (1) the licensing 

and certification of appraisers, (2) the 

registration of AMCs, (3) the issuance of 

temporary licenses and certifications for 

appraisers, (4) the receiving and 

tracking of submitted complaints against 

appraisers and AMCs, (5) the 

investigation of complaints, and (6) 

enforcement actions against appraisers 

and AMCs.8 Under the proposal, the 

evaluation criteria are referred to as 

‘‘program functions.’’ 

Section 1118(a) of Title XI also 

specifically authorizes the ASC to 

impose interim actions and suspensions 

against a State Appraiser Regulatory 

Agency as an alternative to, or in 

advance of, the non-recognition of a 

State Appraiser Regulatory Agency.9

Under the proposed rule, these ‘‘interim 

actions and suspensions’’ would be 

known as ‘‘interim enforcement 

actions.’’ 

Consistent with section 1118 of Title 

XI,10 the proposal would outline three 

types of enforcement actions: interim 

actions, suspensions, and nonrecognition. Title XI refers to nonrecognition as derecognition.11 Under 

the proposed rule, the term ‘‘nonrecognition’’ would be used instead of 

‘‘derecognition’’ to be consistent with 

subpart B of 12 CFR part 1102, which 

sets forth the ASC rules of practice and 

procedure governing non-recognition 

proceedings for State Appraiser 

Regulatory Agencies. 

Finally, section 1106 of Title XI 

provides that the ASC has, among other 

powers, the authority to promulgate 

regulations regarding certain specified 

areas, one of which is enforcement.12

House Report 111–94 indicates that the 

term ‘‘enforcement’’ covers the actions 

the ASC may take in evaluating State 

Appraiser Regulatory Agencies and the 

gamut of sanctions that the ASC may 

impose against such agencies.13 For 

purposes of prescribing regulations, the 

ASC must establish an advisory 

committee of industry participants, 

including appraisers, lenders, consumer 

advocates, real estate agents, and 

government agencies, and hold meetings 

as necessary to support the development 

of regulations.14

C. Background 

Congress enacted Title XI in response 

to concerns that problematic appraisals 

played a major role in the savings and 

loan crisis of the 1980s.15 The purpose 

of Title XI is to provide that Federal 

financial and public policy interests in 

real estate 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 effective supervision.16 To 

help ensure that the purpose of Title XI 

was carried out, Congress established a 

regulatory framework to monitor and 

oversee the real estate appraisal 

industry, including establishing the 

ASC.17

Since the enactment of Title XI, one 

of the ASC’s functions has been to 

monitor the requirements established by 

State Appraiser Regulatory Agencies for 

the certification and licensing of real 

estate appraisers qualified to perform 

appraisals in connection with federally 

related transactions.18 The monitoring is 

accomplished through periodic or 

accelerated compliance reviews of 

Appraiser Programs of each State 19 to 

assess whether the program is operating 

in a manner consistent with Title XI and 

to assess the implementation of 

minimum requirements for licensing 

and certifying appraisers as adopted by 

the Appraiser Qualifications Board 

(AQB) of the Appraisal Foundation 20

pursuant to section 1116 of Title XI.21

The ASC also maintains a national 

registry of State licensed and certified 

appraisers eligible to perform appraisals 

in federally related transactions 

(Appraiser Registry).22

In 2010, Title XI was amended by the 

Dodd-Frank Act.23 Subsection 1473(f) of 

the Dodd-Frank Act expanded the ASC’s 

functions to include monitoring the 

requirements established by State 

Appraiser Regulatory Agencies for the 

registration and supervision of the 

operations and activities of AMCs.24


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Samoa, Guam, Puerto Rico, the Commonwealth of 

the Northern Mariana Islands, and the U.S. Virgin 

Islands do not have AMC Programs. 

25The Dodd-Frank Act added section 1124 to 

Title XI, Appraisal Management Company 

Minimum Requirements, which required the OCC, 

Board, FDIC, NCUA, FHFA, and CFPB to establish, 

by rule, minimum requirements for the registration 

and supervision of AMCs by State Appraiser 

Regulatory Agencies that elect to register and 

supervise AMCs pursuant to Title XI. See 12 U.S.C. 

3353(a). The related final rule was published in the 

Federal Register on June 9, 2015, with an effective 

date of August 10, 2015. See 80 FR 32658 (June 9, 

2015). 

26Public Law 111–203, sec. 1473(f), 124 Stat. 

2192; 12 U.S.C. 3353(c). See supra note 13 at 97. 

27Public Law 111–203, sec. 1473(f), 124 Stat. 

2192; 12 U.S.C. 3353(c). 

28Public Law 111–203, sec. 1473(f), 124 Stat. 

2192; 12 U.S.C. 3332(a)(6). 

29Public Law 111–203, sec.1473(k), 124 Stat. 

2196; 12 U.S.C. 3347. See supra note 13 at 96–97. 

30 Id. 

31 Id. 

32 Id. 

33Public Law 111–203, sec.1473(d), 124 Stat. 

2191; 12 U.S.C. 3335. See supra note 13 at 96. 

34See Curtis W. Copeland, Cong. Research Serv., 

R41472, Rulemaking Requirements and Authorities 

in the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, at 59 and 87 (Nov. 3, 

2010). 

35Public Law 111–203, sec.1473(d), 124 Stat. 

2191; 12 U.S.C. 3335. 

36See supra note 13 at 58. 

37 Id. See also Government Accountability Office, 

GAO–12–147, Real estate Appraisals: Appraisal 

Subcommittee Needs to Improve Monitoring 

Procedures, at 11 and 30 (2012). 

38 83 FR 9144 (Mar. 5, 2018). See also Policy 

Statements, available at https://asc.gov/resources/ 

governance. (hereinafter Policy Statements). 

39Public Law 101–73, 103 Stat. 511–519 (1989). 

See supra note 13 at 58. 

40See supra note 2. 

41 5 U.S.C. chapter 10. Membership in the ASCAC 

was determined in accordance with the Amended 

Balanced Membership Plan dated June 18, 2014. 

See Balanced Membership Plan, dated February 18, 

2014, available at https://www.asc.gov/sites/ 

default/files/documents/GeneralCorrespondence/ 

Balanced%20Membership%20Plan%20-%20Final

%202014.02.12.pdf. See also Amended Balanced 

Membership Plan, dated June 18, 2014, available at 

https://www.asc.gov/sites/default/files/documents/ 

GeneralCorrespondence/Amended%20Balanced

%20Membership%20Plan%202014.06.18.pdf. 

42 12 U.S.C. 3335. 

43See ASCAC Member List, available at https:// 

www.asc.gov/sites/default/files/2023-03/2014.07.14

%20Advisory%20Committee

%20Member%20List%20-

%20amended%201.21.15.pdf. The ASCAC 

members represented a balance of expertise across 

a range of industry participants and stakeholders as 

contemplated by section 1106 of Title XI, 12 U.S.C. 

3335, including appraisers, AMCs, lenders, 

consumer advocates, real estate agents, and 

government agencies. All ASCAC members had 

experience regarding the appraiser regulatory 

framework for federally related transactions. 

State Appraiser Regulatory Agencies 

with an AMC Program are evaluated 

through periodic or accelerated 

compliance reviews to assess whether 

the program is operating in a manner 

consistent with Title XI and to assess 

the implementation of the minimum 

requirements for State registration and 

supervision of AMCs.25 Subsection 

1473(f) also established a parallel 

Federal system of oversight for an AMC 

that operates as a subsidiary of a 

financial institution overseen by a 

Federal banking regulator.26 These 

entities are referred to as ‘‘federally 

regulated AMCs’’ under this proposal. 

Federally regulated AMCs are not 

required to register with a State 

Appraiser Regulatory Agency.27 Finally, 

subsection 1473(f) required the ASC to 

maintain a national registry of AMCs 

that are either registered with and 

subject to supervision of a State 

Appraiser Regulatory Agency or 

operating subsidiaries of a federally 

regulated financial institution (AMC 

Registry).28

In addition to authorities related to 

AMCs, subsection 1473(k) of the DoddFrank Act improved the ASC’s ability to 

oversee State Appraiser Regulatory 

Agencies in several important ways.29

First, subsection 1473(k) added funding 

and staffing to the list of criteria against 

which the ASC must evaluate a State 

Appraiser Regulatory Agency.30 Second, 

subsection 1473(k) requires the ASC to 

evaluate whether a State Appraiser 

Regulatory Agency processes 

complaints and completes its 

investigations in a reasonable time 

period, whether a State Appraiser 

Regulatory Agency appropriately 

disciplines sanctioned appraisers and 

AMCs, whether a State Appraiser 

Regulatory Agency maintains an 

effective regulatory program, and 

whether a State Appraiser Regulatory 

Agency reports complaints and 

disciplinary actions to the Appraiser 

and AMC Registries on a timely basis.31

Third, subsection 1473(k) permits the 

ASC to impose interim actions and 

suspensions against State Appraiser 

Regulatory Agencies under certain 

circumstances.32

Finally, subsection 1473(d) of the 

Dodd-Frank Act added the authority to 

promulgate regulations concerning 

‘‘temporary practice, national registry, 

information sharing, and 

enforcement.’’ 33 If the ASC decides to 

undertake rulemaking on any of the four 

areas identified above,34 subsection 

1473(d) further requires the ASC to 

establish an advisory committee of 

industry participants and hold meetings 

as necessary to support the development 

of regulations.35

D. Reasons for Issuing This Proposed 

Rule 

Title XI did not originally provide the 

ASC with the authority to issue 

legislative rulemaking, nor the authority 

to enforce its own standards and pursue 

incremental improvements in the 

regulatory performance of State 

Appraiser Regulatory Agencies through 

interim actions and suspensions 

(interim enforcement actions).36

Instead of regulations, the ASC has 

issued and relied on Policy Statements 

with respect to monitoring State 

Appraiser Regulatory Agencies.37 The 

Policy Statements address the 

requirements of Title XI and offer 

guidance to State Appraiser Regulatory 

Agencies regarding compliance with 

Title XI and the rules promulgated 

thereunder.38 Additionally, prior to the 

Dodd-Frank Act, the only enforcement 

action that the ASC could take against 

a State Appraiser Regulatory Agency 

was non-recognition, which would 

prohibit all licensed and certified 

appraisers from that State from 

performing appraisals in connection 

with federally related transactions.39

Non-recognition is a severe enforcement 

action that could affect the real estate 

markets and financial institutions 

within the State. To date, the ASC has 

not imposed non-recognition against a 

State Appraiser Regulatory Agency. 

As discussed above, the Dodd-Frank 

Act provided the ASC with additional 

enforcement authorities to take against 

State Appraiser Regulatory Agencies, 

when appropriate, along with related 

rulemaking authority.40 The ASC is now 

issuing this proposed rule to implement 

these additional enforcement authorities 

included in the Dodd-Frank Act. 

E. Recommendations by the ASCAC 

On February 18, 2014, following the 

enactment of the Dodd-Frank Act, the 

ASC established the ASCAC in 

accordance with the Federal Advisory 

Committee Act.41 The purpose of the 

ASCAC was to provide independent 

advice and recommendations to the 

ASC regarding the development of 

regulations that may be prescribed by 

the ASC concerning temporary practice, 

the Appraiser and AMC Registries, 

information sharing, and enforcement.42

The ASCAC was comprised of eighteen 

members nominated by the ASC 

Executive Director and approved by the 

ASC Chairperson in consultation with 

the ASC Board members.43 The ASCAC 

met four times: April 16–17, July 22–23, 

and October 15–16, 2014, and February 


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44See April 16–17, 2014 ASCAC Meeting 

Minutes, available at https://asc.gov/sites/default/ 

files/documents/GeneralCorrespondence/April

%202014%20ASCAC%20Meeting%20Minutes.pdf; 

July 22–23, 2014 ASCAC Meeting Minutes, 

available at https://asc.gov/sites/default/files/ 

documents/GeneralCorrespondence/ 

Meeting%20Minutes%20-%20July%202014.pdf; 

October 15–16, 2014 ASCAC Meeting Minutes, 

available at https://asc.gov/sites/default/files/ 

documents/GeneralCorrespondence/ 

October%202014%20ASCAC

%20Meeting%20Minutes.pdf; and February 12–13, 

2015 ASCAC Meeting Minutes, available at https:// 

asc.gov/sites/default/files/documents/ 

OtherCorrespondence/February%202015

%20Advisory%20Committee%20Minutes.pdf. 

45See ASCAC Final Recommendation Report, 

available at https://www.asc.gov/sites/default/files/ 

2023-03/2015.04.30%20-%20ASCAC

%20Recommendations%20-%20Final.pdf. 

46See May 13, 2015 ASC Meeting Minutes, 

available at https://asc.gov/sites/default/files/ 

documents/MeetingMinutes/05.13.15%20- 

%20Open%20Minutes.pdf. 

47See ASCAC Final Recommendation Report, 

supra note 45 at 3. 

48 Id. at 24 and 26–30. The sanction matrices start 

on page 26. 

49 Id. 

50 12 U.S.C. 3347(a). 

51 Id. 

52 Id. 

53 Id. 

54See ASCAC Final Recommendation Report, 

supra note 45 at 26–30. 

55 Id. at 24. 

56 Id. 

12–13, 2015.44 The ASCAC completed 

its recommendation report on April 30, 

2015,45 and presented its 

recommendations to the ASC on May 

13, 2015.46 The ASCAC’s 

recommendation report stated that most 

members believed the ASC ‘‘must’’ 

codify the ASC Policy Statements 

through rulemaking.47

Given the ASC’s intent to promote 

effective and consistent oversight, the 

ASC is now prepared to implement its 

statutory authority to address the 

effectiveness of Appraiser and AMC 

Programs through rulemaking. The 

ASCAC recommendation report covers 

matters beyond enforcement actions 

against State Appraiser Regulatory 

Agencies and discusses the desirability 

of codifying all the Policy Statements. 

For this proposed rulemaking, the ASC 

is responding to only the ASCAC’s 

recommendations that apply to its 

enforcement authority regarding the 

effectiveness of Appraiser and AMC 

Programs administered by State 

Appraiser Regulatory Agencies and is 

proposing to codify only portions of 

such Policy Statements pertaining to 

such enforcement authorities. The ASC 

considers the ASCAC’s recommendation 

report regarding these enforcement 

authorities to be relevant. Some 

recommendations address ongoing 

issues and problems that the ASC has 

continued to face since the report was 

issued. Many of the report’s underlying 

observations are concerns in the 

appraiser regulatory framework today. 

Thus, the ASC has considered the 

ASCAC’s recommendations in 

developing this proposed rule. 

1. ASCAC’s Sanction Matrices 

The ASCAC developed and 

recommended three sanction matrices to 

be used by the ASC in sanctioning State 

Appraiser Regulatory Agencies.48 The 

three sanction matrices covered 

temporary practice, Appraiser and AMC 

Registries, and enforcement, and 

proposed twelve potential types of 

enforcement actions.49 However, the 

ASC proposes not to adopt the three 

sanction matrices recommended by the 

ASCAC for the following reasons. 

Section 1118(a) of Title XI authorizes 

the ASC to impose enforcement actions 

against a State Appraiser Regulatory 

Agency that fails to have an effective 

regulatory program and includes six 

program functions relevant to making 

this determination.50 The six applicable 

program functions include (1) the 

licensing and certification of appraisers, 

(2) the registration of AMCs, (3) the 

issuance of temporary licenses and 

certifications for appraisers, (4) the 

receiving and tracking of submitted 

complaints against appraisers and 

AMCs, (5) the investigation of 

complaints, and (6) enforcement actions 

against appraisers and AMCs.51 The 

ASC believes that the ASCACrecommended sanction matrices do not 

incorporate all six applicable program 

functions, such as the licensing and 

certification of appraisers and the 

registration of AMCs, in determining 

whether an Appraiser or AMC Program 

is effective in accordance with section 

1118(a) of Title XI.52 Therefore, the ASC 

views the matrices as partially 

incomplete and not effective in 

implementing all the program functions 

in section 1118(a).53

2. ASCAC’s Method of Addressing 

Deficiencies 

The ASCAC recommended that 

enforcement actions be brought per 

individual deficiency against State 

Appraiser Regulatory Agencies using 

sanction matrices.54 Under this ASCAC 

recommendation, an enforcement action 

would be imposed for each deficiency of 

a State Appraiser Regulatory Agency. 

For example, under the ASCACrecommended temporary practice 

sanction matrix, a State Appraiser 

Regulatory Agency could receive a 

warning letter for not issuing temporary 

licenses or certifications on an 

assignment basis and could receive a 

separate suspension for not issuing 

temporary licenses or certifications 

within five business days. 

This enforcement approach 

recommended by the ASCAC would not 

permit the ASC to deviate from the 

matrices to consider the appropriate 

enforcement action based on the 

underlying facts of each compliance 

review. The ASC, however, believes that 

deficiencies should be addressed 

collectively rather than individually to 

allow for the ASC to consider significant 

variations in the underlying facts of 

each compliance review. 

Therefore, under the proposal, the 

ASC would bring an enforcement action 

based on the aggregation of deficiencies 

identified during a compliance review. 

For example, under the proposed rule, 

the ASC would impose only one 

enforcement action against a State 

Appraiser Regulatory Agency for all 

deficiencies identified during a 

compliance review. The number of 

deficiencies, the State Appraiser 

Regulatory Agency’s response to the 

preliminary report, and the presence of 

any relevant mitigating and aggravating 

factors would guide the ASC’s 

consideration of the appropriate 

enforcement action. 

3. ASCAC’s Proposed Enforcement 

Actions 

The ASCAC also recommended 

twelve potential types of enforcement 

actions to be incorporated into the three 

sanction matrices.55 The twelve 

potential types of enforcement actions 

included: (1) a warning letter, (2) 

training for State Appraiser Regulatory 

Agency staff, (3) training for State 

Appraiser Regulatory Agency board 

members, (4) consultation with other 

State authorities, (5) meeting with 

affected parties, (6) a requirement for a 

State Appraiser Regulatory Agency to 

use a disciplinary sanction matrix for 

complaints, (7) expedited or follow-up 

reviews, (8) continuous monitoring, (9) 

interim removal of appraiser(s) from the 

Appraiser Registry or AMC(s) from the 

AMC Registry, (10) other removal of 

appraiser(s) from the Appraiser Registry 

or AMC(s) from the AMC Registry, (11) 

interim derecognition, and (12) 

derecognition.56 The proposed rule 

would directly address three of the 

ASCAC’s recommended enforcement 

actions: warning letters, suspension 

(interim derecognition), and nonrecognition. The proposed rule would 

introduce and define a fourth 

enforcement action: a negotiated 

agreement. 


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57 Id. 

58 Id. 

59See Policy Statements, supra note 38 at 9161. 

The ASC may conduct accelerated reviews, followup reviews, and additional monitoring. A follow-up 

review focuses on specific areas identified during 

a previous review and typically occurs within 6– 

12 months of the previous review. 

60 12 U.S.C. 3347(a). Note, as reflected by the 

statutory text found in section 1118(a) of Title XI, 

12 U.S.C. 3347(a), the ASC’s authority is limited to 

removal on an interim basis, not to exceed 90 days, 

pending State agency action on licensing, 

certification, registration, and disciplinary 

proceedings. 

61See ASCAC Final Recommendation Report, 

supra note 45 at 24. 

62 12 U.S.C. 3347(a). 

63See Policy Statements, supra note 38 at 9155 

and 9158. 

64See ASCAC Final Recommendation Report, 

supra note 45 at 8 and 14. 

65 Id. at 14. 

66 Id. at 8 and 14. 

67 Id. Policy Statement 7 defines ‘‘special 

documented circumstances’’ as extenuating 

circumstances (fully documented) beyond the 

control of the State Appraiser Regulatory Agency 

that delays normal processing of a complaint. See 

Policy Statements, supra note 38 at 9155. 68See Policy Statements, supra note 38 at 9155 

and 9158. 69See ASCAC Final Recommendation Report, 

supra note 45 at 8 and 14. 70 Id. at 14. 71 Id. 

For the reasons stated below, the ASC 

is not planning to explicitly include the 

other nine enforcement actions 

recommended by the ASCAC. The ASC 

believes some potential enforcement 

actions suggested by the ASCAC, such 

as training requirements for State 

Appraiser Regulatory Agency staff and 

board members and the use of a 

disciplinary sanction matrix for 

appraiser and AMC complaints,57

would be implemented more effectively 

through a negotiated agreement, as 

appropriate, rather than as individual 

enforcement actions. For example, a 

negotiated agreement could specify 

terms and conditions for training State 

Appraiser Regulatory Agency staff and 

board members based on the 

deficiencies identified by the ASC. 

Additionally, the ASC does not 

believe there is a need to include other 

potential enforcement actions 

recommended by the ASCAC, such as 

expedited reviews or follow-up reviews, 

continuous monitoring, and 

consultation with State officials or other 

stakeholders,58 as explicit enforcement 

actions in the proposed rule. The ASC 

plans to codify its existing compliance 

review process consistent with its 

current practices and processes for 

conducting compliance reviews, such as 

accelerated reviews, follow-up reviews, 

and additional monitoring. Under the 

proposed rule, the ASC may conduct 

accelerated reviews, follow-up reviews 

within 6–12 months of the previous 

review, and additional monitoring as 

part of the compliance review process.59

The ASC also currently informally 

consults with State officials and other 

stakeholders, when appropriate, to 

monitor Appraiser and AMC Programs. 

With respect to the ASCAC’s 

recommended enforcement actions of 

interim or other removal of an appraiser 

from the Appraiser Registry or an AMC 

from the AMC Registry, section 1118(a) 

of Title XI provides that the ASC has the 

authority to remove a State licensed or 

certified appraiser from the Appraiser 

Registry or a registered AMC from the 

AMC Registry on an interim basis, not 

to exceed 90 days pending State agency 

action on licensing, certification, 

registration, and disciplinary 

proceedings.60 After careful 

consideration, the ASC is not including 

in this proposed rulemaking the interim 

removal of an appraiser from the 

Appraiser Registry or an AMC from the 

AMC Registry as a potential 

enforcement action as suggested by the 

ASCAC.61

The scope of this proposed 

rulemaking is limited to the ASCAC’s 

recommended potential enforcement 

actions that the ASC may take against a 

State Appraiser Regulatory Agency after 

a compliance review rather than actions 

against individual appraisers or AMCs. 

Therefore, this proposed rule does not 

address the ASC’s authority under 

section 1118(a) of Title XI to remove a 

State licensed or certified appraiser 

from the Appraiser Registry or a 

registered AMC from the AMC Registry 

on an interim basis, not to exceed 90 

days, pending State agency action on 

licensing, certification, registration, and 

disciplinary proceedings.62

4. Policy Statements 7 and 10 

Recommendations 

The ASCAC also included specific 

recommendations related to the Policy 

Statements. Policy Statements 7 (State 

Agency Enforcement for Appraiser 

Programs) and 10 (State Agency 

Enforcement for AMC Programs) state 

that, absent special documented 

circumstances, final administrative 

decisions by a State Appraiser 

Regulatory Agency regarding complaints 

must occur within one year (twelve 

months) of the complaint filing date.63

The ASCAC recommended clarifying 

the definition of ‘‘complaint filing 

date’’ 64 because States have different 

interpretations of this term. The ASCAC 

noted that some States consider the 

‘‘complaint filing date’’ to be when the 

State Appraiser Regulatory Agency 

receives the original complaint, while 

others consider it to be when the 

complaint has been screened and 

approved for investigation.65 To address 

this confusion, the ASCAC 

recommended that the term ‘‘complaint 

filing date’’ be defined as the date the 

State Appraiser Regulatory Agency 

receives the original complaint.66 The 

proposed rule avoids using the term 

‘‘complaint filing date’’ to prevent 

confusion. Instead, to implement the 

ASCAC’s recommendation, this 

proposed rule would specify that State 

Appraiser Regulatory Agencies must 

begin the time period for resolving 

complaints based on the date the 

complaint was received. 

The ASCAC also recommended that 

‘‘special documented circumstances,’’ as 

used in Policy Statement 7, should be 

more specifically defined.67 Under this 

proposal, ‘‘special documented 

circumstances’’ would mean welldocumented and monitored extenuating 

circumstances, evaluated by the ASC, 

that are beyond the control of the State 

Appraiser Regulatory Agency and result 

in a complaint processing delay. The 

ASC proposes not to implement a more 

specific definition of ‘‘special 

documented circumstances’’ as 

recommended by the ASCAC because a 

broad definition is more appropriate 

considering the variations in complaint 

processing among State Appraiser 

Regulatory Agencies. For example, some 

State Appraiser Regulatory Agencies 

may involve the State’s Office of 

Attorney General in investigating 

complaints, while others may use staff 

investigators, contractors, or advisory 

committees. Therefore, the ASC 

proposes a definition of ‘‘special 

documented circumstances’’ similar to 

the one in Policy Statement 7.68 The 

ASCAC recommended providing more 

examples of what constitutes ‘‘special 

documented circumstances’’ for 

resolving complaints within one year 

(12 months).69 Specifically, the ASCAC 

recommended clarifying the example in 

Policy Statement 7 that describes those 

periods when State rules require referral 

of a complaint to another State entity for 

review, and the State Appraiser 

Regulatory Agency is precluded from 

further processing of the complaint until 

it is returned.70 The ASCAC 

recommended that the example should 

be clarified to refer to a period of time 

when a case is referred to a separate 

State entity such as the State’s Office of 

Attorney General for prosecution, or to 

an administrative law judge for a 

hearing.71 Another example 

recommended by the ASCAC was the 

time gap between the date the complaint 

was initially received and the receipt of 


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72 Id. 

73 Id. at 8 and 14–15. 

74 Id. at 14. 

75Under the proposed rule, ‘‘AMC Rule’’ means 

regulations established by the Office of the 

Comptroller of the Currency, the Board of 

Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, and the 

Federal Housing Finance Agency regarding the 

minimum requirements for AMCs under section 

1124 of Title XI (12 U.S.C. 3353). (12 CFR 34.210 

through 34.216; 12 CFR 225.190 through 225.196; 

12 CFR 323.8 through 323.14; 12 CFR 1222.20 

through 1222.26). 

76See ASCAC Final Recommendation Report, 

supra note 45 at 14. 

77See Policy Statements, supra note 38 at 9155. 

78The ASCAC also recommended that complaints 

that only relate to value should not be dismissed 

solely on that basis, and State Appraiser Regulatory 

Agencies should be obligated to analyze all 

complaints for USPAP compliance, even if a 

USPAP violation is not explicitly alleged. See 

ASCAC Final Recommendation Report, supra note 

45 at 14. The ASC believes that this proposal would 

address the ASCAC’s recommendations described 

above. The proposed rule would require State 

Appraiser Regulatory Agencies to consider whether 

any potential violations of USPAP should be 

investigated when examining an appraisal report in 

connection with a complaint, including complaints 

based solely on value. 

79See ASCAC Final Recommendation Report, 

supra note 45 at 14. 

80See, e.g., 12 U.S.C. 3331 and 12 U.S.C. 

3332(a)(1)(A). 

81See ASCAC Final Recommendation Report, 

supra note 45 at 14. 

82 Id. 

83 Id. 

84 Id. at 25. 

85 Id. The mitigating factors recommended by the 

ASCAC include no prior deficiencies of any type; 

prior deficiencies of another type that were minor 

and have been corrected; understanding and 

acknowledging the deficiency; immediate steps 

taken to correct the issue; personnel issues such as 

illness or loss of a key staff member; change in 

leadership; the State Appraiser Regulatory Agency 

otherwise has an effective and efficient regulatory 

program; the occurrence of a natural disaster; and 

a State Appraiser Regulatory Agency board member 

who had a conflict of interest was cleared by a State 

ethics agency before participating in a matter 

(unless the ASC finds the conflict created a bias that 

affected the outcome). 

86 Id. The aggravating factors recommended by 

the ASCAC include a pattern of prior deficiencies 

of another type that have not been corrected; a 

pattern of prior deficiencies of the same type; 

numerous deficiencies of various types; refusal to 

acknowledge the deficiency; lack of cooperation 

with the ASC staff; a lack of willingness or lack of 

efforts to correct deficiencies; deficiencies are 

material and, if not corrected in a timely manner, 

will pose a potential risk to the program, licensees, 

financial institutions or agencies or to the public; 

submission of false statements or documents, or 

other deceptive practices; a State Appraiser 

Regulatory Agency board member involved in a 

decision who had a conflict of interest or bias that 

affected the outcome of a matter; other deficiencies 

in the program that might indicate systemic issues; 

risk of program failure; and systemic failure to 

exercise reasonable care toward equitable 

enforcement. 

all the necessary information to begin 

processing it.72

The ASC does not plan to incorporate 

the examples recommended by the 

ASCAC in this proposal or in any 

revisions to the Policy Statements, nor 

to provide any further examples. The 

ASC holds the view that there must be 

a legitimate practical challenge limiting 

the State Appraiser Regulatory Agency’s 

ability to resolve complaints within one 

year (12 months) from when the 

complaint was received, which will be 

evaluated on a case-by-case basis, and 

that further examples are, therefore, not 

necessary. 

The ASCAC’s last recommendation 

was to clarify what qualifies as an 

‘‘investigation’’ of the merits of a 

complaint.73 The ASCAC gave two 

examples from Policy Statement 7 that 

provide guidance on what qualifies as 

an ‘‘investigation’’ of the merits of a 

complaint. Consistent with the ASCAC’s 

first referenced example from Policy 

Statement 7,74 the proposed rule would 

require State Appraiser Regulatory 

Agencies to ensure that individuals 

analyzing complaints are knowledgeable 

about Title XI, the Uniform Standards of 

Professional Appraisal Practice 

(USPAP), and appraisal practices. Under 

the proposed rule, these individuals 

must be qualified and their 

qualifications must be documented, 

which will be evaluated by the ASC. 

The proposed rule would have a similar 

requirement for AMC Programs, where 

individuals who analyze complaints 

against AMCs are required to be 

knowledgeable about Title XI, the AMC 

Rule,75 USPAP, and appraisal practices 

and their qualifications must be 

documented, which will be evaluated 

by the ASC. 

The proposed rule would also make 

some modifications to the ASCAC’s 

second referenced example from Policy 

Statement 7.76 According to Policy 

Statement 7, State Appraiser Regulatory 

Agencies must analyze each complaint 

to determine whether additional 

violations, especially those relating to 

USPAP, should be added to the 

complaint.77 The proposed rule would 

require State Appraiser Regulatory 

Agencies to consider whether any 

potential violations of USPAP should be 

investigated when examining an 

appraisal report in connection with a 

complaint, including complaints based 

solely on value.78

Although the ASCAC interpreted 

‘‘additional violations’’ to include 

violations of Federal and State law,79

the proposed rule would only require 

State Appraiser Regulatory Agencies to 

consider whether any potential 

violations of USPAP should be 

investigated. This is because the ASC is 

responsible for ensuring that real estate 

appraisals used in federally related 

transactions are performed according to 

USPAP by State licensed and certified 

appraisers.80 However, the ASC 

encourages State Appraiser Regulatory 

Agencies to consider whether to 

investigate any violations of Federal and 

State law not explicitly alleged in the 

complaint in accordance with State law 

or regulations. 

The ASCAC also provided examples 

of how State Appraiser Regulatory 

Agencies have different definitions of 

what constitutes an ‘‘investigation.’’ For 

some State Appraiser Regulatory 

Agencies, the ‘‘investigation’’ may 

consist simply of the screening of a 

complaint by a staff member.81 If the 

staff member decides that the complaint 

has no merit or that it needs only a 

telephone call or letter to the appraiser, 

it is either not opened or opened and 

closed immediately.82 For other State 

Appraiser Regulatory Agencies, a full 

field investigation is conducted on all 

complaints.83 As a result of these 

different definitions, it is challenging to 

establish a standard definition of an 

investigation because the investigatory 

process is typically governed by State 

law or regulation. Additionally, each 

investigation is contingent upon the 

specific facts of the complaint. During a 

compliance review, the ASC examines a 

sample of complaint files to assess 

whether the State Appraiser Regulatory 

Agency is following the investigatory 

process governed by State law to ensure 

timely and effective supervision of 

appraisers. Therefore, the ASC does not 

plan to further clarify what qualifies as 

an ‘‘investigation’’ of the merits of a 

complaint. 

5. ASCAC’s Mitigating and Aggravating 

Factors 

The ASCAC also produced a list of 

mitigating and aggravating factors for 

the sanction matrices.84 The ASCAC 

defined ‘‘a mitigating factor’’ as any 

information or evidence regarding the 

deficiency that might result in a 

decreased sanction.85 The ASCAC 

defined ‘‘an aggravating factor’’ as any 

information or evidence regarding the 

deficiency that might result in an 

increased sanction.86 Except as 

discussed below, the ASC has separately 

included, with some modifications, all 

of the mitigating and aggravating factors 

recommended by the ASCAC in this 

proposed rule. 

The ASC proposes not to separately 

include the recommended mitigating 

and aggravating factors relating to a 

State Appraiser Regulatory Agency 

board member involved in a 

disciplinary decision who had a conflict 

of interest or bias because the ASC 

believes such circumstance would be 


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87 12 U.S.C. 3347(a). 

88These requirements are currently outlined in 

the Policy Statements. See Policy Statements, supra 

note 45. 

89See Policy Statements, supra note 38 at 9160– 

9161. Currently, the ASC evaluates overall Title XI 

compliance of a State Appraiser Regulatory 

Agency’s Appraiser or AMC Program by assigning 

one of five ASC Findings at the end of the 

compliance review process. 89The ratings, known 

as ASC Findings, are classified as follows: 

Excellent, Good, Needs Improvement, Not 

Satisfactory, or Poor. 

90 12 U.S.C. 3345. 

91 Id. 

92See AQB Criteria, supra note 20. 

93 12 U.S.C. 3335. 

94The term ‘‘license’’ as defined under the 

Administrative Procedure Act, 5 U.S.C. 551(8), 

encompasses a wide range of forms of permission, 

including agency permits, certificates, approvals, 

registrations, charters, memberships, statutory 

exemptions, and others. This definition under the 

Administrative Procedure Act, 5 U.S.C. 551(8), is 

consistent with many State Administrative 

Procedure Acts, such as the State Administrative 

Procedure Acts of Arizona (Ariz. Rev. Stat. Ann. 

§ 41–1001(13) (2024)), Arkansas (Ark. Code Ann. 

§ 25–15–202(4) (2024)), Colorado (Colo. Rev. Stat. 

§ 24–4–102(7) (2024)), Delaware (Del. Code Ann. 29 

§ 10102(5) (2023), District of Columbia (D.C. Code 

§ 2–502(12) (2024)), Indiana (Ind. Code§ 4–21.5–1– 

8 (2024)), Iowa (Iowa Code. § 17A.2(6) (2024)), 

Kansas (Kan. Stat. Ann. § 77–502(c) (2024)), Maine 

(Me. Rev. Stat. 5 § 8002(5) (2023)), and 

Massachusetts (Mass. Gen. Laws. 30A § 13) (2024)). 

Furthermore, most State Appraiser Regulatory 

Agencies issue temporary practice permits. 

95 12 U.S.C. 3350(11)(B) (defining AMC as any 

‘‘external third party . . . [that, in part,] contract[s] 

covered under the proposed mitigating 

or aggravating factor of whether the 

State Appraiser Regulatory Agency 

failed to exercise reasonable care in 

equitable, consistent, and timely 

enforcement. The ASC also proposes to 

include other mitigating and aggravating 

factors, such as the number of State 

licensed and certified appraisers or 

registered AMCs under the jurisdiction 

of a State Appraiser Regulatory Agency 

and human-made disasters or 

emergencies or other governmentdeclared orders. 

The ASC believes these factors 

accurately capture the considerations 

that would allow the ASC to increase or 

decrease its initial assessment of an 

Appraiser or AMC Program’s level of 

effectiveness. These factors would give 

State Appraiser Regulatory Agencies 

incentives to cooperate with the ASC 

and timely address any deficiencies 

while still recognizing that certain 

situations, outside of a State Appraiser 

Regulatory Agency’s control, such as a 

natural disaster, can sometimes affect 

the effectiveness of an Appraiser or 

AMC Program. 

II. Proposed Rule 

The ASC is issuing this proposal to 

implement a framework to govern the 

ASC’s enforcement authority regarding 

the effectiveness of Appraiser and AMC 

Programs overseen by State Appraiser 

Regulatory Agencies. The Dodd-Frank 

Act strengthened the ASC’s oversight of 

State Appraiser Regulatory Agencies 

and authorized the ASC to impose 

interim enforcement actions against 

State Appraiser Regulatory Agencies 

before having to impose ‘‘nonrecognition.’’ 

Under this proposal, the ASC would 

conduct an analysis of the applicable 

program functions, as required by 

section 1118(a) of Title XI,87 to assess 

the effectiveness of an Appraiser or 

AMC Program. The proposed rule 

would outline the specified 

requirements for each program function 

that the ASC will examine for program 

effectiveness.88 Additionally, the 

proposed rule would require State 

Appraiser Regulatory Agencies to 

demonstrate to the ASC’s reasonable 

satisfaction that their Appraiser and 

AMC Programs are operating 

consistently with the specified 

requirements of each program function. 

If any deficiencies are identified, the 

ASC would be required to document 

them in both the preliminary and final 

reports. 

Under the proposal, the ASC would 

assess the initial effectiveness of an 

Appraiser or AMC Program based on the 

number of deficiencies per program 

function as identified in the preliminary 

report. The ASC proposes using the 

number of deficiencies for the initial 

assessment of effectiveness because this 

approach would provide transparency 

into the ASC’s decision-making and 

help to provide consistent and fair 

treatment between similarly situated 

State Appraiser Regulatory Agencies. 

The proposed rule would establish 

four levels of effectiveness: effective, 

moderately effective, slightly effective, 

and ineffective, each specifying the 

allowable number of deficiencies per 

program function. The effectiveness of 

Appraiser and AMC Programs would be 

assessed through the four levels 

mentioned above, which the ASC plans 

to incorporate into the ASC’s overall 

rating criteria to emphasize further that 

a State Appraiser Regulatory Agency is 

maintaining an effective Appraiser or 

AMC Program.89

Under the proposed rule, the ASC 

would consider whether the State 

Appraiser Regulatory Agency’s response 

to the preliminary report and any 

relevant mitigating and aggravating 

factors justify an increase or decrease in 

the level of the regulatory program’s 

effectiveness identified in the 

preliminary report for the final report. 

If a State Appraiser Regulatory 

Agency fails to have an effective 

Appraiser or AMC Program, the ASC 

would have the authority, under the 

proposed rule, to impose an 

enforcement action. This approach 

would enable the ASC to evaluate the 

underlying facts of each compliance 

review and take appropriate 

enforcement action against the State 

Appraiser Regulatory Agency for not 

maintaining an effective Appraiser or 

AMC Program. The proposed rule 

would set forth four enforcement 

actions: warning letters, negotiated 

agreements, suspensions, and nonrecognition. This section provides a 

section-by-section analysis of the 

proposed rule. 

A. Key Definitions 

This proposal would define several 

terms consistent with their use in Title 

XI, Federal regulations promulgated 

thereunder, or the Policy Statements. 

For example, the proposed rule would 

include definitions from the AMC Rule 

in their entirety for the following terms: 

AMC, appraisal management services, 

appraiser panel, consumer credit, 

covered transaction, dwelling, federally 

regulated AMC, person, and USPAP. 

Therefore, this section highlights key 

definitions included in the proposal. 

AQB Criteria. Pursuant to section 1116 

of Title XI,90 the AQB establishes the 

minimum requirements for real estate 

appraisers to obtain a State license or 

certification as well as ‘‘Trainee 

Appraiser’’ and ‘‘Supervisory 

Appraiser’’ requirements. The proposed 

rule would define ‘‘AQB Criteria’’ as the 

minimum requirements for the licensure 

and certification of real estate appraisers 

and the minimum requirements for 

trainee and supervisory appraisers 

established by the AQB. The proposed 

definition is consistent with section 

1116 of Title XI,91 as well as 

substantively similar to the AQB’s Real 

Property Appraiser Qualification 

Criteria, which set forth the minimum 

education, experience, and examination 

requirements for real property 

appraisers.92

Assignment. Section 1106 of Title XI 

confers rulemaking authority to the ASC 

in the area of temporary practice.93 For 

purposes of issuing a temporary license 

or certification,94 the proposal would 

define ‘‘assignment’’ as one or more real 

estate appraisals and written appraisal 

report(s) covered by a single contract. 

The proposed definition here is 

intended to be consistent with the use 

of the term ‘‘assignment’’ in the 

statutory definition of ‘‘AMC’’ but solely 

in the context of temporary practice.95


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with licensed and certified appraisers to perform 

appraisal assignments’’). 

96 12 U.S.C. 3347(a). 

97 12 CFR 1102.305(a)(2)(i)(A). 

98 12 CFR 1102.301(i). A ‘‘record’’ includes 

‘‘records, files, documents . . . or any portion 

thereof, in any form the ASC regularly maintains 

them.’’ 

99 12 CFR 1102.305(a)(2)(i)(D). One type of 

document that must be made publicly available is 

a copy of ‘‘all records (regardless of form or format), 

such as correspondence relating to field reviews or 

other regulatory subjects, released to any person 

under § 1102.306 [(‘‘Procedures for requesting 

records’’)] that, because of the nature of their 

subject matter, the ASC has determined are likely 

to be subject of subsequent requests.’’ Under this 

proposal, field reviews are referred to as 

‘‘compliance reviews.’’ 

100See supra note 98. 

101See supra note 99. 

102 12 U.S.C. 3347. 

103 Id. 

104 Id. 

105 Id. 106Note, section 1104(b) of Title XI, 12 U.S.C. 

3333(b), refers to ‘‘preliminary State audit reports,’’ 

which is synonymous with the term ‘‘preliminary 

report’’ under this proposal. 107 12 U.S.C. 3347(a). 

Deficiency. A State Appraiser 

Regulatory Agency would be deemed to 

have a deficiency if the State Appraiser 

Regulatory Agency’s Appraiser or AMC 

Program is not in compliance with any 

specified requirements of the applicable 

program functions required by section 

1118(a) of Title XI.96 The ASC would 

analyze and consider the initial 

effectiveness of Appraiser or AMC 

Programs based on the number of 

deficiencies per program function as 

identified in the preliminary report to 

provide for a consistent and transparent 

enforcement approach. The ASC then 

would have the option to impose an 

enforcement action, such as a warning 

letter that describes the deficiency or 

deficiencies, or enter into a negotiated 

agreement with a State Appraiser 

Regulatory Agency if the agency fails to 

address the deficiency or deficiencies 

identified in a previously issued 

warning letter or the final report 

indicates that the regulatory program is 

slightly effective or ineffective. 

Final order. The proposed rule would 

require the ASC to issue a final order to 

suspend a State Appraiser Regulatory 

Agency. The proposed definition of 

‘‘final order’’ would include findings of 

fact, conclusions of law, and, if 

applicable, the terms of the enforcement 

action imposed against a State 

Appraiser Regulatory Agency for failing 

to have an effective Appraiser or AMC 

Program. A ‘‘final order’’ is one type of 

document that the ASC is required to 

make public via computer 

telecommunications.97

Final report. After the State Appraiser 

Regulatory Agency has had an 

opportunity to respond to the 

preliminary report, it is current practice 

that the ASC prepares and issues a final 

report on its monitoring findings. The 

‘‘final report’’ would, under the 

proposed rule, include the ASC’s final 

analysis of the regulatory program’s 

effectiveness, identifying any 

deficiencies. In preparing the final 

report, the ASC would consider whether 

the State Appraiser Regulatory Agency’s 

response to the preliminary report and 

any relevant mitigating or aggravating 

factors support a change to the level of 

the regulatory program’s effectiveness. 

A ‘‘final report’’ is considered one type 

of record 98 that must be made publicly 

available.99

Negotiated agreement. The proposal 

defines ‘‘negotiated agreement’’ to mean 

a written agreement signed between the 

ASC and a State Appraiser Regulatory 

Agency to correct deficiencies that 

negatively impact the regulatory 

program’s effectiveness. The proposed 

definition would specify that the 

agreement may provide that the State 

Appraiser Regulatory Agency commits 

to taking a certain action or actions or 

refraining from a certain action or 

actions by a specified time. For 

example, these agreements could 

require mandatory training of State 

Appraiser Regulatory Agency staff and/ 

or board members to address certain 

findings, weaknesses, and deficiencies 

or submission of a commitment letter or 

board resolution to take corrective 

action in response to the State Appraiser 

Regulatory Agency’s deficiencies. A 

‘‘negotiated agreement’’ is considered 

one type of record 100 that must be made 

publicly available.’’ 101

Non-recognition. Section 1118 of Title 

XI authorizes the ASC to impose nonrecognition on a State Appraiser 

Regulatory Agency.102 Subpart B of 12 

CFR part 1102 prescribes rules of 

practice and procedure governing nonrecognition proceedings under section 

1118 of Title XI.103 The proposed 

definition of ‘‘non-recognition’’ reflects 

the statutory text of section 1118 of Title 

XI,104 which states that the ASC and all 

agencies, instrumentalities, and 

federally recognized entities under Title 

XI shall not recognize appraiser 

certifications and licenses from States 

whose appraisal policies, practices, 

funding, staffing, or procedures are 

found to be inconsistent with Title XI. 

The proposed rule would define ‘‘nonrecognition’’ as the ASC and all 

agencies, instrumentalities, and 

federally recognized entities under Title 

XI shall not recognize or accept 

appraiser licenses and certifications 

issued by a State Appraiser Regulatory 

Agency whose policies, practices, 

funding, staffing, or procedures are 

found to be inconsistent with Title XI 

and Federal regulations promulgated 

thereunder. ‘‘Non-recognition’’ is 

synonymous with ‘‘derecognition,’’ 

which is referenced in section 1118 of 

Title XI.105 Under the proposed rule, 

‘‘non-recognition’’ would be used 

instead of ‘‘derecognition’’ to be 

consistent with the language of subpart 

B of 12 CFR part 1102. 

Preliminary report.106 After the 

examination of records and interviews 

with State Appraiser Regulatory Agency 

representatives, it is the current practice 

that the ASC provides a staff report or 

preliminary report to the State 

Appraiser Regulatory Agency detailing 

the initial monitoring findings. Under 

the proposed definition, the preliminary 

report would also include an initial 

analysis of the regulatory program’s 

effectiveness, identifying any 

deficiencies, and the ASC’s initial 

assessment of the level of effectiveness 

of the regulatory program. 

Program functions. As previously 

discussed, section 1118(a) of Title XI 

specifies a list of criteria that the ASC 

must include in its analysis of a 

regulatory program’s effectiveness.107

The proposal would define ‘‘program 

functions’’ as those responsibilities of a 

State Appraiser Regulatory Agency that 

the ASC will examine and include in its 

analysis of the effectiveness of a State 

Appraiser Regulatory Agency’s 

regulatory program consistent with 

section 1118(a) of Title XI (12 U.S.C. 

3347(a)). The proposed rule would 

outline five program functions for 

Appraiser Programs that will be 

considered in the ASC’s analysis: (1) 

licensing and certification of appraisers, 

(2) issuance of temporary licenses and 

certifications for appraisers, (3) 

receiving and tracking of submitted 

complaints against appraisers, (4) 

investigation of complaints against 

appraisers, and (5) enforcement actions 

against appraisers. For AMC Programs, 

the proposed rule would outline four 

program functions that will be 

considered in the ASC’s analysis: (1) 

registration of AMCs, (2) receiving and 

tracking of submitted complaints against 

AMCs, (3) investigation of complaints 

against AMCs, and (4) enforcement 

actions against AMCs. 

Special documented circumstances. 

The proposed rule would define 


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108 12 U.S.C. 3332(a)(5). 

109 12 U.S.C. 3350(1). 

110 12 U.S.C. 3347(a). 

111 12 U.S.C. 3347(a)(4). 

112 12 U.S.C. 3347(a). 

113 12 U.S.C. 3332(a)(1) and 3347(a)(1)–(5). 

114Compliance reviews are conducted by the 

ASC, on a periodic or accelerated basis, to 

determine whether an Appraiser or AMC Program 

administered by a State Appraiser Regulatory 

Agency is operating in a manner consistent with 

Title XI and Federal regulations promulgated 

thereunder. The proposed rule does not specify that 

compliance reviews must occur on-site. Instead, the 

proposed rule would provide flexibility to the ASC 

to determine the most appropriate means of 

conducting a compliance review. 

115See Policy Statements, supra note 38 at 9160– 

9161. 

116 Id. 

‘‘special documented circumstances’’ as 

well-documented and monitored 

extenuating circumstances, evaluated by 

the ASC, that are beyond the control of 

the State Appraiser Regulatory Agency 

and result in a complaint processing 

delay. Special documented 

circumstances are relevant when 

considering the effectiveness of State 

Appraiser Regulatory Agencies’ 

supervision in resolving complaints 

filed against trainee appraisers, State 

licensed appraisers, State certified 

appraisers, and AMCs within one year 

from the date the complaint was 

received. 

State Appraiser Regulatory Agency. 

Section 1103(a)(5) of Title XI uses the 

term ‘‘State Appraiser Regulatory 

Agencies.’’ 108 The proposed rule would 

define ‘‘State Appraiser Regulatory 

Agency’’ as a State agency that certifies 

and licenses real estate appraisers and 

registers and supervises AMCs or 

otherwise regulates real estate 

appraisers and AMCs who operate in 

that State, consistent with section 

1121(1) of Title XI (12 U.S.C. 3350(1)). 

‘‘State Appraiser Regulatory Agency’’ is 

synonymous with ‘‘State appraiser 

certifying and licensing agency’’ as 

defined in section 1121(1) of Title XI.109

To the extent that the registration and 

supervision of AMCs is carried out by 

a separate and distinct agency or 

agencies within a State, each such 

agency is also a State Appraiser 

Regulatory Agency. For example, the 

District of Columbia has two separate 

and distinct agencies that administer the 

Appraiser and AMC Programs. The 

Department of Licensing and Consumer 

Protection administers the Appraiser 

Program, and the Department of 

Insurance, Securities and Banking 

administers the AMC Program. The 

Department of Licensing and Consumer 

Protection and the Department of 

Insurance, Securities and Banking in the 

District of Columbia would each be 

considered a State Appraiser Regulatory 

Agency under the proposed rule, and 

the ASC would monitor each of their 

respective regulatory programs. 

Suspension. The proposed definition 

of ‘‘suspension’’ is that the State 

Appraiser Regulatory Agency would be 

prohibited from performing certain 

task(s) as part of the State Appraiser 

Regulatory Agency’s responsibilities 

under Title XI for a specified period of 

time. This definition is consistent with 

section 1118(a) of Title XI, which 

authorizes the ASC to impose ‘‘interim 

actions and suspensions,’’ against a 

State Appraiser Regulatory Agency as an 

alternative to, or in advance of, the nonrecognition of a State Appraiser 

Regulatory Agency.110 Some examples 

of possible prohibited tasks include 

adding appraisers to the Appraiser 

Registry or AMCs to the AMC Registry, 

renewing licenses or certifications, and 

issuing temporary licenses or 

certifications to appraisers. The 

proposed rule would provide that a 

suspension would be effective until the 

ASC lifts the suspension. 

Warning letter. Section 1118(a)(4) of 

Title XI requires the ASC to monitor 

State Appraiser Regulatory Agencies to 

determine whether each State Appraiser 

Regulatory Agency maintains an 

effective regulatory program.111 If a 

State Appraiser Regulatory Agency fails 

to have an effective appraiser regulatory 

program, section 1118(a) authorizes the 

ASC to impose enforcement actions.112

One example of an enforcement action 

is a ‘‘warning letter,’’ which the 

proposed rule would define as a letter 

issued by the ASC informing a State 

Appraiser Regulatory Agency of a 

deficiency or deficiencies relating to its 

regulatory program. The proposed 

definition also provides that if the 

deficiency is not addressed, it could 

negatively impact the effectiveness of 

the State Appraiser Regulatory Agency’s 

regulatory program. 

B. Compliance Reviews 

One of the ASC’s functions is to 

monitor State Appraiser Regulatory 

Agencies’ Appraiser and AMC Programs 

for compliance with Title XI.113

Monitoring these programs is 

accomplished through periodic or 

accelerated compliance reviews of each 

State Appraiser Regulatory Agency’s 

Appraiser and AMC Programs.114

Proposed § 1102.602 would codify the 

existing compliance review process 

consistent with the ASC’s current 

practices and processes for conducting 

compliance reviews but would propose 

a few changes that are discussed below. 

The ASC is proposing this approach 

because the ASC has generally found in 

its supervisory experience that these 

practices for conducting compliance 

reviews are effective and efficient. 

Currently, the compliance review 

process is outlined in the Policy 

Statements.115 The ASC intends to 

revise the Policy Statements before the 

proposed implementation period, 

discussed in section III below, ends. 

These revisions would address any 

potential inconsistencies between the 

Policy Statements and any final rule 

based on this proposal. 

1. Compliance Review Cycles 

The proposal would provide that the 

ASC has two primary review cycles: 

two-year and one-year. This is the same 

standard frequency as the ASC’s current 

practice outlined in the Policy 

Statements.116 Most State Appraiser 

Regulatory Agencies are scheduled on a 

two-year review cycle, but some may be 

moved to a one-year review cycle if the 

ASC determines more frequent reviews 

are needed to ensure that the State 

Appraiser Regulatory Agency maintains 

an effective Appraiser or AMC Program. 

The ASC is proposing this frequency for 

compliance reviews because, based on 

its supervisory experience, the ASC has 

generally found that these two primary 

review cycles provide sufficient 

monitoring. The two review cycles 

would allow for early identification of 

deficiencies to prevent or minimize 

their impact on the effectiveness of 

Appraiser and AMC Programs. 

Additionally, the ASC has generally 

found that the two review cycles are not 

burdensome and do not strain the 

resources of the ASC or State Appraiser 

Regulatory Agencies. The proposed rule 

would also allow the ASC to use 

alternate compliance review cycles at its 

sole discretion. This discretion would 

allow the ASC to monitor the 

performance and effectiveness of the 

frequency of compliance reviews. After 

evaluation, the ASC could, for example, 

modify the standard frequency of the 

primary two review cycles to three years 

and two years. 

In addition to the two primary review 

cycles, the proposal would provide that 

the ASC may conduct follow-up reviews 

and additional monitoring. Consistent 

with the ASC’s current practice, a 

follow-up review would focus only on 

specific areas identified during the 

previous review and would occur 

within 6 to 12 months of the previous 

review. Under the proposed rule, the 

ASC may also conduct accelerated 

compliance reviews when there are 

indications that an Appraiser or AMC 

Program might not be operating 


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117 Id. at 9159. See also supra note 89. 

118 12 U.S.C. 3347(a). 

119 Id. 

120See Policy Statements, supra note 38 at 9160– 

9161. 

121 Id. 

consistently with Title XI or Federal 

regulations promulgated thereunder. For 

example, an accelerated compliance 

review could be warranted when the 

ASC receives multiple complaints 

alleging inadequate enforcement by a 

State Appraiser Regulatory Agency. This 

is consistent with the ASC’s current 

practice which is to identify potential 

Title XI compliance concerns before 

they occur and take appropriate action 

to prevent the occurrence or minimize 

the impact on the effectiveness of an 

Appraiser or AMC Program. The 

proposed rule would also provide that 

if a single State Appraiser Regulatory 

Agency oversees both Appraiser and 

AMC Programs, the compliance reviews 

for each regulatory program may have 

the same or different review cycles. This 

is also consistent with current practice, 

which has been proven to be effective 

based on the ASC’s supervisory 

experience. 

2. Compliance Review Process 

Paragraph (c) of proposed § 1102.602 

would set forth the general process of a 

compliance review. Similar to current 

practice, compliance reviews would 

consist of an examination of records and 

interviews with State Appraiser 

Regulatory Agency representatives. 

After completing the examination, the 

ASC would prepare a preliminary report 

that includes the initial monitoring 

findings, which is consistent with 

current practice. 

However, the preliminary report 

would, under the proposed rule, include 

an initial analysis of the effectiveness of 

the regulatory program, as required in 

proposed § 1102.603, identifying any 

deficiencies. The preliminary report 

would also, under the proposed rule, 

include the ASC’s initial assessment of 

the level of effectiveness of the 

regulatory program. This would be a 

modification of the ASC’s current 

practice; under Policy Statement 12, this 

analysis of the regulatory program’s 

effectiveness occurs after the ASC 

concludes the compliance review and 

issues an overall ASC Finding of 

Poor.117 The ASC believes that 

analyzing the effectiveness of the 

regulatory program earlier during the 

compliance review process would 

improve efficiency and streamline the 

process, so the ASC proposes to utilize 

this approach instead. Additionally, the 

proposed rule would include new 

interim enforcement actions that can be 

used if the ASC makes the assessment 

that an Appraiser or AMC Program is 

not effective. These interim enforcement 

actions are an additional tool that can be 

used in conjunction with more frequent 

compliance reviews or additional 

monitoring. 

Under the proposed rule, a State 

Appraiser Regulatory Agency may 

respond within 60 business days from 

the date of the preliminary report. This 

is consistent with the current practice, 

which has been proven to be effective, 

based on the ASC’s supervisory 

experience, to give State Appraiser 

Regulatory Agencies adequate time to 

consider and respond with any relevant 

information showing the State 

Appraiser Regulatory Agency’s efforts to 

remedy any deficiencies. After 

considering the State Appraiser 

Regulatory Agency’s response along 

with any mitigating and aggravating 

factors, the final report would, under 

the proposed rule, include the final 

analysis of the effectiveness of the 

regulatory program, as required in 

proposed § 1102.603, identifying any 

deficiencies. The final report would 

also, under the proposed rule, include 

the ASC’s final assessment of the level 

of effectiveness of the regulatory 

program in accordance with paragraph 

(b)(2) of proposed § 1102.603. 

Similar to the current compliance 

review process, under the proposed 

rule, State Appraiser Regulatory 

Agencies would be required to maintain 

sufficient documentation to demonstrate 

that their Appraiser and AMC Programs 

operate consistently with Title XI. ASC 

staff reviews a representative sampling 

of documentation in each of the 

compliance areas to assess the efficiency 

of the State Appraiser Regulatory 

Agency’s Appraiser or AMC Program. 

The proposed rule would further 

provide that documentation must be 

made available for inspection, as 

requested by the ASC, including access 

to the information stored in any 

electronic system or providing access to 

the electronic system itself. The 

electronic access requirement is not 

included in the Policy Statements, but 

it is consistent with current ASC 

practice. 

C. Analysis of the Effectiveness of 

Appraiser and AMC Programs 

To determine whether an Appraiser or 

AMC Program is effective, the 

amendments to section 1118(a) of Title 

XI by the Dodd-Frank Act require the 

ASC to perform an analysis of 

previously specified key program 

functions.118 The proposed rule would 

incorporate the analysis, as required by 

section 1118(a) of Title XI,119 earlier in 

the compliance review process and 

provide the analysis in the preliminary 

and final reports. Under paragraph (a) of 

proposed § 1102.603, the ASC would 

examine whether the State Appraiser 

Regulatory Agency is complying with 

all specified requirements of each 

program function and, if not, document 

any identified deficiencies in the 

preliminary and final reports. 

1. Assessment of Program Effectiveness 

The deficiencies identified in the 

preliminary report would serve as the 

starting point for the ASC’s initial 

assessment of the regulatory program’s 

effectiveness. Under paragraph (b)(1) of 

proposed § 1102.603, the ASC would 

assess the regulatory program’s initial 

effectiveness based on the 

corresponding number of deficiencies 

per program function identified in the 

preliminary report. The ASC proposes 

using the number of deficiencies for the 

initial assessment of effectiveness 

because this approach would provide 

transparency into the ASC’s decisionmaking and help to provide consistent 

and fair treatment between similarly 

situated State Appraiser Regulatory 

Agencies. 

Paragraph (b)(1) of proposed 

§ 1102.603 would establish four levels 

of effectiveness: effective, moderately 

effective, slightly effective, and 

ineffective, each specifying the 

allowable number of deficiencies per 

program function. The effectiveness of 

Appraiser and AMC Programs will be 

assessed through the four levels 

mentioned above. Currently, the ASC 

evaluates overall Title XI compliance of 

a State Appraiser Regulatory Agency’s 

Appraiser or AMC Program by assigning 

one of five ASC Findings at the end of 

the compliance review process.120 The 

ratings, known as ASC Findings, are 

classified as follows: Excellent, Good, 

Needs Improvement, Not Satisfactory, or 

Poor.121 The ASC plans to incorporate 

the four levels of program effectiveness 

into the ASC’s overall rating criteria of 

the ASC Findings to emphasize further 

that a State Appraiser Regulatory 

Agency is maintaining an effective 

Appraiser or AMC Program. 

The following example illustrates 

how this approach would work. The 

ASC might identify three deficiencies 

under the same program function of 

licensing and certification of appraisers. 

The first deficiency could be that the 

licensing and certification requirements 

do not meet the minimum requirements 

in Title XI. The second deficiency could 

be that the State Appraiser Regulatory 


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122See Policy Statements, supra note 38. 

123See Policy Statement 1, supra note 38 at 9147– 

9149. 

124 Id. at 9148–9149. 

125 Id. at 9147–9149. 

126 Id. 

127See Policy Statement 4, supra note 38 at 9151 

and 9153. 

128 Id. at 9152–9153. 

129See Policy Statement 5, supra note 38 at 9153– 

9154. 

130See Policy Statements 4 and 6, supra note 38 

at 9151–9153 and 9154. 

131See Policy Statement 6, supra note 38 at 9154. 

132See Policy Statements 4, 5 and 6, supra note 

38 at 9151–9154. 

133See Policy Statement 3, supra note 38 at 9150– 

9151. 

134See Policy Statement 2, supra note 38 at 9149. 

135 Id. 

Agency does not have a reciprocity 

policy. The third deficiency could be 

that the State Appraiser Regulatory 

Agency fails to ensure that approved 

applicants meet the applicable 

minimum requirements of the AQB 

Criteria. The initial assessment of the 

Appraiser Program’s level of 

effectiveness would be deemed ‘‘slightly 

effective’’ in the preliminary report 

under proposed § 1102.603(b)(1)(iii)(A) 

because the ASC found three 

deficiencies in one program function. 

Due to the difference in the number 

of program functions between Appraiser 

and AMC Programs, the allowable 

number of deficiencies per program 

function for each level of effectiveness 

would be different for the Appraiser and 

AMC Programs under the proposed rule. 

However, this initial assessment would 

be performed in an equivalent manner 

for both program types. 

Under paragraph (b)(2) of proposed 

§ 1102.603, the ASC would consider 

whether the State Appraiser Regulatory 

Agency’s response to the preliminary 

report and any relevant mitigating and 

aggravating factors in proposed 

§ 1102.604 justify an increase or 

decrease in the level of the regulatory 

program’s effectiveness for the final 

report. This analysis would allow the 

ASC to consider the totality of the 

circumstances for its final assessment of 

the regulatory program’s level of 

effectiveness. The ASC has generally 

found from its supervisory experience 

that mitigating and aggravating factors 

could arise in each compliance review 

because there can be significant 

variations in the underlying facts of 

each compliance review. The ASC is 

proposing this approach because it 

would allow the ASC flexibility to 

ensure that the level of effectiveness is 

truly representative of the State 

Appraiser Regulatory Agency’s 

regulatory program. If the ASC 

considers the regulatory program’s level 

of effectiveness to be appropriately 

mitigated or aggravated, the relevant 

factors, including a description of how 

the factors were applied, will be 

documented in the final report. 

2. Program Functions for Appraiser and 

AMC Programs 

Paragraphs (c)(1) and (2) of proposed 

§ 1102.603 would outline the specified 

requirements for each program function 

that the ASC will examine to assess the 

effectiveness of an Appraiser or AMC 

Program. The ASC proposes these 

requirements under paragraphs (c)(1) 

and (2) of proposed § 1102.603 because 

they are currently included in the Policy 

Statements and provide guidance to 

State Appraiser Regulatory Agencies in 

complying with Title XI and the rules 

promulgated thereunder.122 The ASC 

believes that these requirements are fair 

and manageable because State Appraiser 

Regulatory Agencies are familiar with 

these requirements already and have 

been implementing them. Additionally, 

the ASC believes this approach should 

reduce any challenges that State 

Appraiser Regulatory Agencies may face 

in implementing any final rule based on 

this proposal. These requirements under 

paragraphs (c)(1) and (2) of proposed 

§ 1102.603 are listed below, starting 

with the Appraiser Program under 

paragraph (c)(1) of proposed § 1102.603. 

3. Specified Requirements for an 

Appraiser Program 

Under paragraph (c)(1) of proposed 

§ 1102.603, a State Appraiser Regulatory 

Agency must demonstrate to the ASC’s 

reasonable satisfaction that its Appraiser 

Program is operating consistently with 

the specified requirements of each 

program function as listed below. 

Paragraph (c)(1)(i) of proposed 

§ 1102.603 would specify eleven 

requirements for the program function 

of licensing and certification of 

appraisers. These eleven requirements 

are: 

(1) the State Appraiser Regulatory 

Agency’s licensing and certification 

requirements must meet the minimum 

requirements set forth in section 1116 of 

Title XI (12 U.S.C. 3345); 123

(2) the State Appraiser Regulatory 

Agency’s trainee and supervisory 

appraiser requirements, if applicable, 

must meet the minimum requirements 

set forth in section 1116 of Title XI (12 

U.S.C. 3345); 124

(3) the State Appraiser Regulatory 

Agency must use the designations for 

trainee appraisers, State licensed 

appraisers, and State certified appraisers 

in accordance with section 1116 of Title 

XI (12 U.S.C. 3345); 125

(4) the State Appraiser Regulatory 

Agency must use permitted scopes of 

practice for State licensed and certified 

appraisers in accordance with sections 

1113 and 1114 of Title XI (12 U.S.C. 

3342 and 3343); 126

(5) the State Appraiser Regulatory 

Agency must process applications in a 

timely, consistent, equitable, and welldocumented manner in accordance with 

Title XI; 127

(6) the State Appraiser Regulatory 

Agency must ensure that individuals 

who process applications are 

knowledgeable about section 1116 of 

Title XI (12 U.S.C. 3345) as evaluated by 

the ASC; 128

(7) the State Appraiser Regulatory 

Agency must have a reciprocity policy 

for issuing a reciprocal license or 

certification for an individual from 

another State in accordance with section 

1122(b) of Title XI (12 U.S.C. 

3351(b)); 129

(8) the State Appraiser Regulatory 

Agency must ensure that all approved 

applicants meet the applicable 

minimum requirements of the AQB 

Criteria; 130

(9) the State Appraiser Regulatory 

Agency must ensure that appraiser 

education courses are consistent with 

the AQB Criteria; 131

(10) the State Appraiser Regulatory 

Agency must obtain and maintain 

sufficient documentation pertaining to 

all applications, including initial 

licenses or certifications, upgrades, 

renewals, reinstatements, and 

supervisory approvals, to create a record 

of facts and determinations and the 

reasons for those determinations made 

by the State Appraiser Regulatory 

Agency; 132 and 

(11) the State Appraiser Regulatory 

Agency must report appraiser data on 

the issuance and renewal of licenses 

and certifications on a timely basis to 

the Appraiser Registry in accordance 

with section 1109(a)(2) of Title XI (12 

U.S.C. 3338(a)(2)).133

Paragraph (c)(1)(ii) of proposed 

§ 1102.603 would specify nine 

requirements for the issuance of 

temporary licenses and certifications for 

appraisers. These nine requirements are: 

(1) the State Appraiser Regulatory 

Agency must recognize the license or 

certification of an appraiser issued by 

another State Appraiser Regulatory 

Agency on a temporary basis in 

accordance with section 1122(a)(1) of 

Title XI (12 U.S.C. 3351(a)(1)); 134

(2) the State Appraiser Regulatory 

Agency must not impose excessive fees 

for a temporary license or certification 

in accordance with section 1122(a)(2) of 

Title XI (12 U.S.C. 3351(a)(2)); 135


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136 Id. 

137 Id. The requirement for temporary licenses or 

certifications to be issued within five business days 

was determined based on the ASC’s supervisory 

experience. This timeframe has been in place under 

Policy Statement 2, and the ASC has generally 

found the requirement to be a fair balance. The 

requirement allows appraisers to quickly obtain 

temporary licenses or certifications for temporary 

assignments related to federally related transactions 

while also giving the State Appraiser Regulatory 

Agency sufficient time to review and process these 

temporary practice applications. 

138 Id. Title XI prohibits State Appraiser 

Regulatory Agencies from imposing excessive fees 

or burdensome requirements for temporary practice, 

as determined by the ASC. 12 U.S.C. 3351(a)(2). 

These practices for issuing temporary licenses or 

certifications are based on the ASC’s supervisory 

experience and have been in place under Policy 

Statement 2. The ASC has generally found that 

when State Appraiser Regulatory Agencies adhere 

to these practices, it helps to avoid placing 

burdensome requirements on applicants for 

temporary practice. 

139 Id. Title XI requires that appraisers obtain a 

temporary license or certification from the State 

Appraiser Regulatory Agency in the State where 

they will temporarily conduct appraisal 

assignments related to federally related 

transactions. This requirement for issuing 

temporary licenses or certifications with an 

effective date was established based on the ASC’s 

supervisory experience and has been in place under 

Policy Statement 2. The ASC considers this 

requirement to be a fair balance between the need 

for public protection from unauthorized appraisal 

practices and the necessity for appraisers to be 

aware of the validity period of their temporary 

licenses or certifications. 

140 Id. 

141 Id. 

142 Id. 

143See Policy Statement 7, supra note 38 at 9155. 

144 Id. 

145See Policy Statement 1, supra note 38 at 9148. 

146See Policy Statement 7, supra note 38 at 9155. 

147 Id. The requirement that all complaints be 

resolved within 12 months was determined based 

on the ASC’s supervisory experience. This 

timeframe has been in place under Policy Statement 

7. The ASC has generally found that the 12-month 

limit has provided adequate time for State 

Appraiser Regulatory Agencies to investigate and 

adjudicate complaints while still ensuring that 

appraisers are timely disciplined for misconduct or 

wrongdoing. Maintaining this 12-month 

requirement would help reduce the burden on State 

Appraiser Regulatory Agencies. 

148 Id. at 9155–9156. 

149 Id. at 9155. 

150 Id. at 9155–9156. 

151See Policy Statement 3, supra note 38 at 9150– 

9151. 

(3) the State Appraiser Regulatory 

Agency must not impose burdensome 

requirements, as determined by the 

ASC, for temporary practice in 

accordance with section 1122(a)(2) of 

Title XI (12 U.S.C. 3351(a)(2)); 136

(4) the State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications within five business 

days after receiving a complete 

application for such issuance in 

accordance with section 1122(a) of Title 

XI (12 U.S.C. 3351(a)); 137

(5) the State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications on an assignment basis 

and must allow for at least one 

extension through a streamlined process 

in accordance with section 1122(a) of 

Title XI (12 U.S.C. 3351(a)); 138

(6) the State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications designating the effective 

date in accordance with section 1122(a) 

of Title XI (12 U.S.C. 3351(a)); 139

(7) the State Appraiser Regulatory 

Agency must track all temporary 

licenses or certifications using a permit 

log or system; 140

(8) the State Appraiser Regulatory 

Agency must supervise all individuals 

to whom the State Appraiser Regulatory 

Agency issues a temporary license or 

certification while performing 

assignments in its State, must discipline 

such individuals, when appropriate, for 

misconduct or wrongdoing, and must 

report each disciplinary action to the 

ASC and other appropriate State 

Appraiser Regulatory Agencies to 

ensure effective supervision in 

accordance with sections 1117, 1118, 

and 1122(a) of Title XI (12 U.S.C. 3346, 

3347, and 3351(a)); 141 and 

(9) the State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the basis for the 

determinations made by the State 

Appraiser Regulatory Agency in 

processing and issuing temporary 

licenses or certifications.142

Paragraph (c)(1)(iii) of proposed 

§ 1102.603 would specify two 

requirements for the program function 

of receiving and tracking of submitted 

complaints against appraisers as 

follows: 

(1) the State Appraiser Regulatory 

Agency must have a system for 

processing and investigating complaints 

and sanctioning trainee appraisers, State 

licensed appraisers, and State certified 

appraisers in a timely, effective, 

consistent, equitable, and welldocumented manner; 143 and 

(2) the State Appraiser Regulatory 

Agency must track and monitor all 

complaints using a complaint log or 

system.144

Paragraph (c)(1)(iv) of proposed 

§ 1102.603 would specify five 

requirements for the program function 

of investigations of complaints against 

appraisers. These five requirements are: 

(1) the State Appraiser Regulatory 

Agency must require appraisals to be 

performed in accordance with the latest 

version of USPAP in accordance with 

sections 1101 and 1103(a)(1)(A) of Title 

XI (12 U.S.C. 3331 and 

3332(a)(1)(A)); 145

(2) when examining an appraisal 

report in connection with a complaint, 

including complaints based solely on 

value, the State Appraiser Regulatory 

Agency must consider whether any 

potential violations of USPAP should be 

investigated; 146

(3) to ensure effective supervision, the 

State Appraiser Regulatory Agency must 

resolve all complaints filed against 

trainee appraisers, State licensed 

appraisers, and State certified appraisers 

within one year (12 months) from the 

date the complaint was received except 

in special documented 

circumstances; 147

(4) the State Appraiser Regulatory 

Agency must ensure that individuals 

who analyze complaints are 

knowledgeable about Title XI, USPAP, 

and appraisal practices and must 

document how such individuals are 

qualified, which will be evaluated by 

the ASC; 148 and 

(5) the State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the facts and determinations 

made by the State Appraiser Regulatory 

Agency in processing and investigating 

a complaint and the reasons for its final 

disposition.149

Paragraph (c)(1)(v) of proposed 

§ 1102.603 would specify two 

requirements for the program function 

of enforcement actions against 

appraisers as follows: 

(1) the State Appraiser Regulatory 

Agency must supervise trainee 

appraisers, State licensed appraisers, 

and State certified appraisers and must 

discipline such individuals, when 

appropriate, for misconduct and 

wrongdoing; 150 and 

(2) the State Appraiser Regulatory 

Agency must report all disciplinary 

actions against State licensed and 

certified appraisers to the ASC within 

five business days after the disciplinary 

action is final as determined by State 

law.151

4. Specified Requirements for an AMC 

Program 

Under paragraph (c)(2) of proposed 

§ 1102.603, a State Appraiser Regulatory 

Agency must demonstrate to the ASC’s 

reasonable satisfaction that its AMC 

Program is operating consistently with 

the specified requirements of each 

program function as listed below. 

Paragraph (c)(2)(i) of proposed 

§ 1102.603 would specify seven 

requirements for the program function 

of registration of AMCs. These seven 

requirements are: 

(1) the State Appraiser Regulatory 

Agency must establish and maintain an 


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152See Policy Statement 8, supra note 38 at 9156– 

9157. Under the proposed rule, ‘‘AMC Registry Fee 

Rule’’ means the ASC’s regulations on the 

collection and transmission of AMC Registry fees as 

codified in subpart E of this part. 

153 Id. 

154 Id. 

155See Policy Statement 9, supra note 38 at 9157– 

9158. 

156See Policy Statement 10, supra note 38 at 

9158. 

157 Id. 

158 Id. The requirement that all complaints be 

resolved within 12 months was determined based 

on the ASC’s supervisory experience. This 

timeframe has been in place under Policy Statement 

10. The ASC has generally found that the 12-month 

limit has provided adequate time for State 

Appraiser Regulatory Agencies to investigate and 

adjudicate complaints while still ensuring that 

AMCs are timely disciplined for misconduct or 

wrongdoing. Maintaining this 12-month 

requirement would help reduce the burden on State 

Appraiser Regulatory Agencies. 

159 Id. 

160 Id. 

161See Policy Statement 9, supra note 38 at 9157– 

9158. 

162See ASCAC Final Recommendation Report, 

supra note 45 at 25. 

163 Id. 

AMC regulatory program with legal 

authority and mechanisms consistent 

with Title XI, the AMC Rule, and the 

AMC Registry Fee Rule; 152

(2) the State Appraiser Regulatory 

Agency must impose requirements on 

AMCs that are consistent with Title XI 

and the AMC Rule; 153

(3) the State Appraiser Regulatory 

Agency must enforce and document 

ownership limitations for AMCs in a 

manner consistent with Title XI and the 

AMC Rule; 154

(4) the State Appraiser Regulatory 

Agency must process AMC applications 

in a timely, consistent, equitable, and 

well-documented manner in accordance 

with Title XI, the AMC Rule, and the 

AMC Registry Fee Rule; 

(5) the State Appraiser Regulatory 

Agency must ensure that individuals 

who process applications are 

knowledgeable about Title XI and the 

AMC Rule as evaluated by the ASC; 

(6) the State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the basis for its determinations 

for AMC eligibility for the AMC 

Registry, including the appraiser panel 

requirements, ownership limitations, 

and AMC Registry fee collection and 

submission to the ASC; and 

(7) the State Appraiser Regulatory 

Agency must report AMCs eligible for 

the AMC Registry on a timely basis in 

accordance with section 1109(a)(3) of 

Title XI (12 U.S.C. 3338(a)(3)) and the 

AMC Registry Fee Rule.155

Paragraph (c)(2)(ii) of proposed 

§ 1102.603 would specify two 

requirements for the program function 

of receiving and tracking of submitted 

complaints against AMCs as follows: 

(1) the State Appraiser Regulatory 

Agency must have a system for 

processing and investigating complaints 

and sanctioning AMCs (other than 

federally regulated AMCs) in a timely, 

effective, consistent, equitable, and 

well-documented manner; 156 and 

(2) the State Appraiser Regulatory 

Agency must track and monitor all 

complaints against AMCs using a 

complaint log or system.157

Paragraph (c)(2)(iii) of proposed 

§ 1102.603 would specify three 

requirements for the program function 

of investigation of complaints against 

AMCs. These three requirements are: 

(1) to ensure effective supervision, the 

State Appraiser Regulatory Agency must 

resolve all complaints filed against 

AMCs (other than federally regulated 

AMCs) within one year (12 months) 

from the date the complaint was 

received except in special documented 

circumstances; 158

(2) the State Appraiser Regulatory 

Agency must ensure that individuals 

who analyze complaints are 

knowledgeable about Title XI, the AMC 

Rule, USPAP, and appraisal practices 

and must document how such 

individuals are qualified, which will be 

evaluated by the ASC; and 

(3) the State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the facts and determinations 

made by the State Appraiser Regulatory 

Agency in processing and investigating 

a complaint and the reasons for its final 

disposition.159

Paragraph (c)(2)(iv) of proposed 

§ 1102.603 would specify two 

requirements for the program function 

of enforcement actions against AMCs as 

follows: 

(1) the State Appraiser Regulatory 

Agency must supervise AMCs (other 

than federally regulated AMCs) and 

must discipline such entities, when 

appropriate, for misconduct and 

wrongdoing; 160 and 

(2) the State Appraiser Regulatory 

Agency must report all disciplinary 

actions against AMCs (other than 

federally regulated AMCs) to the ASC 

within five business days after the 

disciplinary action is final as 

determined by State law.161

D. Mitigating and Aggravating Factors 

Under proposed § 1102.604, the ASC 

would consider mitigating and 

aggravating factors as appropriate in 

adjusting the ASC’s initial assessment of 

the regulatory program’s level of 

effectiveness identified in the 

preliminary report for a State Appraiser 

Regulatory Agency. Proposed § 1102.604 

would allow the ASC to increase or 

decrease its initial assessment of the 

level of effectiveness depending upon 

the presence of these individualized 

factors in this section. 

As previously mentioned, the ASC 

believes it is not feasible to 

predetermine all the mitigating and 

aggravating factors that could arise in 

each compliance review because there 

can be significant variations in the 

underlying facts of each compliance 

review. Therefore, proposed § 1102.604 

would include common factors to be 

considered when adjusting a regulatory 

program’s level of effectiveness. The 

ASCAC recommended categorizing the 

factors as either solely mitigating or 

aggravating. The ASC believes from its 

supervisory experience that these 

factors should be classified into 

categories because they could have 

different effects depending on the 

specific circumstances, either mitigating 

or aggravating. Under proposed 

§ 1102.604, the mitigating and 

aggravating factors would be classified 

together into four categories: (1) the 

nature and extent of the deficiency; (2) 

prior compliance history by the State 

Appraiser Regulatory Agency; (3) the 

structure, stability, and responsiveness 

of the State Appraiser Regulatory 

Agency; and (4) other situations or 

circumstances such as natural or 

human-made disasters or emergencies 

or other government-declared orders. 

The ASC has found in conducting 

compliance reviews, based on its 

supervisory experience, that most 

mitigating and aggravating factors could 

fit into one of the four categories under 

proposed § 1102.604. 

Except as discussed below, the four 

categories would encompass almost all 

of the ASCAC’s recommendations 

regarding mitigating and aggravating 

factors.162 Some changes would be 

made to the wording of certain 

mitigating and aggravating factors to 

enhance clarity and style and to avoid 

duplication. Further, the ASC proposes 

not to include the recommended 

mitigating and aggravating factors 

relating to a State Appraiser Regulatory 

Agency board member involved in a 

disciplinary decision who had a conflict 

of interest or bias because the ASC 

believes such circumstance would be 

covered under the proposed mitigating 

or aggravating factor of whether the 

State Appraiser Regulatory Agency 

failed to exercise reasonable care toward 

equitable, consistent, and timely 

enforcement.163


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164 12 U.S.C. 3347(a). 

165 Id. 

166 Id. 

167See supra note 39. 

168See supra note 44. 

Given the complexity of some events 

and significant variations in the 

underlying facts of each compliance 

review, it is not feasible to predetermine 

the outcome or the relative weights of 

potential mitigating and aggravating 

factors for every compliance review. 

The presence of mitigating or 

aggravating factors does not 

automatically lead to the conclusion 

that a departure from the ASC’s initial 

assessment of the regulatory program’s 

level of effectiveness identified in the 

preliminary report is justified. The 

factors must be weighed against each 

other and the facts and circumstances of 

the deficiency itself. The presence of 

one or more mitigating circumstances, 

along with one or more aggravating 

circumstances, may or may not offset 

each other. Where mitigating factors 

predominate, the ASC may consider 

increasing the regulatory program’s 

level of effectiveness. Conversely, where 

aggravating factors predominate, the 

ASC may consider decreasing the 

regulatory program’s level of 

effectiveness. 

If the ASC considers the regulatory 

program’s level of effectiveness to be 

appropriately mitigated or aggravated, 

the relevant factors, including a 

description of how the factors were 

applied, would be documented in the 

final report. 

E. Enforcement Actions 

As stated earlier, section 1118(a) of 

Title XI authorizes the ASC to impose 

certain specified enforcement actions 

against a State Appraiser Regulatory 

Agency that fails to have an effective 

appraiser regulatory program.164

Proposed § 1102.605 would specify the 

enforcement actions that could be taken 

against State Appraiser Regulatory 

Agencies to establish an effective and 

consistent enforcement approach. 

1. Interim Enforcement Actions 

Section 1118(a) of Title XI specifically 

authorizes the ASC to impose interim 

actions and suspensions against a State 

Appraiser Regulatory Agency as an 

alternative to, or in advance of, the nonrecognition of a State Appraiser 

Regulatory Agency.165 Under paragraph 

(a) of proposed § 1102.605, the ASC 

would include three types of potential 

interim enforcement actions against 

State Appraiser Regulatory Agencies 

when the final report indicates that the 

level of the regulatory program is less 

than effective: warning letters, 

negotiated agreements, and suspensions. 

Paragraph (a)(1) of proposed 

§ 1102.605 would include a warning 

letter as a potential interim enforcement 

action against State Appraiser 

Regulatory Agencies. A warning letter 

would be the least severe form of an 

interim enforcement action and would 

communicate to a State Appraiser 

Regulatory Agency any deficiencies in 

its regulatory program. If the 

deficiencies are not addressed, the 

regulatory program’s effectiveness could 

be negatively impacted. Under 

paragraph (a)(1) of proposed § 1102.605, 

the ASC could consider issuing a 

warning letter to a State Appraiser 

Regulatory Agency when the final report 

indicates that the level of the regulatory 

program’s effectiveness is moderately 

effective or slightly effective. 

The ASC would also include a 

negotiated agreement, under paragraph 

(a)(2) of proposed § 1102.605, as a 

potential interim enforcement action. A 

negotiated agreement would involve a 

State Appraiser Regulatory Agency 

agreeing to address deficiencies that 

hinder the effectiveness of the 

regulatory program by taking certain 

actions or refraining from certain 

actions within a specified timeframe. 

For example, a negotiated agreement 

could involve the State Appraiser 

Regulatory Agency preparing and 

submitting compliance plans, approved 

by the ASC, outlining the corrective 

actions to be taken, specifying the 

individuals responsible for the actions, 

and setting a timeframe for completion. 

Under paragraph (a)(2) of proposed 

§ 1102.605, a negotiated agreement 

could be employed when the final 

report indicates that the regulatory 

program is slightly effective or 

ineffective. A negotiated agreement 

could also be employed, under 

paragraph (a)(2) of proposed § 1102.605, 

when the State Appraiser Regulatory 

Agency fails to rectify the identified 

deficiencies outlined in a previously 

issued warning letter. The ASC believes 

a negotiated agreement would provide 

the ASC with the flexibility to address 

and correct deficiencies while working 

cooperatively with the State Appraiser 

Regulatory Agency to rectify any 

deficiencies. 

The last potential interim 

enforcement action included under 

paragraph (a)(3) of proposed § 1102.605 

would be suspension, which would be 

the most severe form of an interim 

enforcement action. Under paragraph 

(a)(3) of proposed § 1102.605, the ASC 

could potentially prohibit a State 

Appraiser Regulatory Agency from 

performing certain task(s) as part of its 

responsibilities under Title XI for a 

specified time period. The tasks may 

involve, but are not limited to: (1) the 

addition of State licensed or certified 

appraisers to the Appraiser Registry or 

AMCs to the AMC Registry; (2) the 

issuance of upgrades of individuals’ 

level of licensure or certification to 

perform appraisals in connection with 

federally related transactions; (3) 

renewal of licenses or certifications of 

State licensed or certified appraisers for 

the performance of appraisals in 

connection with federally related 

transactions; or (4) the issuance of 

temporary licenses or certifications to 

individuals who are licensed or certified 

in another State to perform appraisals in 

connection with federally related 

transactions in the suspended State 

Appraiser Regulatory Agency’s State, as 

set forth in section 1122(a) of Title XI 

(12 U.S.C. 3351(a)). Under paragraph 

(a)(3) of proposed § 1102.605, the ASC 

could apply a suspension when the final 

report indicates that the regulatory 

program is ineffective. The ASC could 

also apply a suspension, under 

proposed § 1102.605(a)(3), when a State 

Appraiser Regulatory Agency refuses to 

enter into a negotiated agreement or a 

State Appraiser Regulatory Agency fails 

to meet its obligations under the 

negotiated agreement. This interim 

enforcement action is supported by the 

statutory text found in section 1118(a) of 

Title XI that the ASC has the authority 

to impose suspensions of a State 

Appraiser Regulatory Agency as an 

alternative to, or in advance of, the nonrecognition of a State Appraiser 

Regulatory Agency.166 The proposed 

rule would also provide a crossreference to the procedures governing 

suspension proceedings found at 

proposed § 1102.606. 

2. Non-Recognition 

As referenced above, prior to the 

Dodd-Frank Act, Title XI authorized the 

ASC to take only one enforcement 

action—non-recognition—against a 

State Appraiser Regulatory Agency not 

operating its Appraiser Program in a 

manner consistent with Title XI.167

Non-recognition is the most severe 

enforcement action that the ASC could 

impose against a State Appraiser 

Regulatory Agency. As noted in the 

ASCAC meeting minutes dated April 17, 

2014, the ASC should carefully consider 

the economic impact of non-recognition 

before imposing such action.168 To date, 

the ASC has not imposed nonrecognition against a State Appraiser 

Regulatory Agency. 


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169See Policy Statement 12, supra note 38 at 

9159–9160. 

170 Id. 

171 Id. at 9159. 

172 Id. 

173 Id. at 9159–9160. 

174 Id. at 9159. 

175 Id. 

176 Id. 

177 Id. 

178 Id. 

Under paragraph (b) of proposed 

§ 1102.605, the ASC could impose nonrecognition when the ASC issues a 

written finding under section 1118(b) of 

Title XI (12 U.S.C. 3347(b)) and a State 

Appraiser Regulatory Agency fails to 

comply with the final order of 

suspension. The ASC could also impose 

non-recognition under paragraph (b) of 

proposed § 1102.605 when the ASC 

issues a written finding pursuant to 

section 1118(b) of Title XI (12 U.S.C. 

3347(b)) and the final report indicates 

that the regulatory program is 

ineffective. 

F. Procedures Governing Suspension 

Proceedings 

Proposed § 1102.606 would codify, 

with some modifications and minor 

non-substantive corrections, the 

procedures found in Policy Statement 

12 for the procedures governing 

suspension proceedings.169 Policy 

Statement 12 states the due process 

procedures that the ASC must follow to 

exercise its authority to impose interim 

sanctions on State Appraiser Regulatory 

Agencies.170 Consistent with the ASC’s 

current procedures in Policy Statement 

12, the proposal would provide a 

written notice of intention to suspend 

that is published in the Federal Register 

and give the State Appraiser Regulatory 

Agency the opportunity to respond to 

the notice.171 Under paragraph (a) of 

proposed § 1102.606, the ASC would 

issue a written notice of intention 

(Notice) to suspend the State Appraiser 

Regulatory Agency, which would be 

published in the Federal Register. 

Policy Statement 12 states that the ASC 

would verify the State Appraiser 

Regulatory Agency’s date of receipt of 

the Notice and publish the Notice in the 

Federal Register along with the State 

Appraiser Regulatory Agency’s date of 

receipt of the Notice.172 The ASC 

recognizes that verifying a State 

Appraiser Regulatory Agency’s date of 

receipt of the Notice could be 

problematic if a State Appraiser 

Regulatory Agency refuses to 

acknowledge receipt of the Notice. 

Therefore, paragraph (a)(2) of proposed 

§ 1102.606 would alleviate this potential 

problem by requiring the ASC to serve 

notice upon the State Appraiser 

Regulatory Agency by sending a copy of 

the Notice to either the last known 

email or mailing address of the State 

Appraiser Regulatory Agency’s office 

and deeming the service complete upon 

sending. 

To ensure timely enforcement 

decisions, proposed § 1102.606 would 

modify the procedural timeframes and 

deadlines applicable to a State 

Appraiser Regulatory Agency or the 

ASC in Policy Statement 12 173 for a 

suspension proceeding. The ASC 

believes the procedural timeframes and 

deadlines in proposed § 1102.606 are 

reasonable for several reasons. The 

proposal would permit the State 

Appraiser Regulatory Agency to receive 

advance notice of the deficiencies 

through the issuance of both 

preliminary and final reports. The 

proposed timeframes would also allow 

the State Appraiser Regulatory Agency 

to have approximately one month for 

each information-gathering phase of a 

suspension proceeding, based on an 

estimated 20 business days in a month. 

Finally, the proposed rule would 

authorize the ASC to grant a waiver 

extending any time limit in connection 

with a suspension proceeding on its 

own or for good cause shown. 

Furthermore, the ASC believes that 

timely enforcement decisions will help 

build and maintain public confidence in 

the appraiser regulatory framework 

while promoting transparency and 

accountability. This approach would 

also enhance the ASC’s reputation by 

fostering trust and credibility among 

State Appraiser Regulatory Agencies, 

appraisers, AMCs, financial institutions, 

and the public. 

Under paragraph (b) of proposed 

§ 1102.606, the State Appraiser 

Regulatory Agency would have the 

opportunity to respond to the Notice by 

submitting a response or a notice not to 

contest within 20 business days after 

publication of the Notice in the Federal 

Register. Currently, Policy Statement 12 

states the State Appraiser Regulatory 

Agency may submit a response within 

15 business days of receipt of the 

Notice.174 The ASC is proposing to 

extend the response timeframe by an 

additional five business days, so the 

State Appraiser Regulatory Agency 

would effectively have a month to reply 

to the Notice. Consistent with the ASC’s 

current procedures in Policy Statement 

12, the ASC may consider the facts 

presented in the Notice to be true and 

issue a final order if a State Appraiser 

Regulatory Agency does not submit a 

response or a notice not to contest.175

Under paragraph (c) of proposed 

§ 1102.606, the State Appraiser 

Regulatory Agency may file a written 

brief, memorandum, or other statement 

presenting factual data, as well as policy 

and legal arguments related to the 

matters outlined in the Notice. This 

submission, under the proposed rule, 

must occur within 40 business days 

following the publication of the Notice 

in the Federal Register. According to 

Policy Statement 12, the State Appraiser 

Regulatory Agency may file this 

documentation within 45 days after the 

date of receipt by the State Appraiser 

Regulatory Agency of the Notice as 

published in the Federal Register.176

The ASC is proposing to shorten the 

timeframe for the reasons stated above. 

The State Appraiser Regulatory 

Agency could also, under paragraph (d) 

of proposed § 1102.606, request an oral 

presentation to further present, 

emphasize, and clarify the facts, 

policies, and laws regarding the issues 

outlined in the Notice. Such a request 

must be made within 40 business days 

after publication of the Notice in the 

Federal Register. Policy Statement 12 

states that a State Appraiser Regulatory 

Agency may request an oral 

presentation 45 business days after the 

date of receipt by the State Appraiser 

Regulatory Agency of the Notice as 

published in the Federal Register.177

The ASC is proposing to shorten the 

timeframe for the reasons stated above. 

Under paragraph (d) of proposed 

§ 1102.606, if a State Appraiser 

Regulatory Agency requests an oral 

presentation, the ASC must hear the 

matter within 20 business days of 

receiving the request. Policy Statement 

12 states the ASC must hear the matter 

within 45 business days of receiving the 

request.178 However, the ASC believes 

that enforcement decisions should be 

made expeditiously to ensure the 

soundness and effectiveness of the 

appraiser regulatory framework, so the 

ASC is proposing a shorter 20-day 

timeframe to hear the oral presentation. 

Under paragraph (f) of proposed 

§ 1102.606, the ASC must make a final 

decision on the matter by issuing a final 

order, within 80 business days after 

publication of the Notice in the Federal 

Register or within 100 business days 

after publication of the Notice in the 

Federal Register if the ASC receives a 

timely request for an oral presentation. 

Policy Statement 12 states that the ASC 

must issue a final order within 90 

business days after the date of receipt by 

the State Appraiser Regulatory Agency 

of the Notice as published in the 

Federal Register or in the case of oral 

presentation having been granted, 


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179 Id. at 9160. 180 Id. at 9159. 181 12 U.S.C. 3347(a)(2). 

within 30 days after presentation.179

However, the ASC believes that 

enforcement decisions should be made 

expeditiously to ensure the soundness 

and effectiveness of the appraiser 

regulatory framework, so the ASC is 

proposing a shorter general 80-day 

timeframe. The ASC also believes a 100- 

day timeframe in the event of a timely 

submitted request for an oral 

presentation is reasonable because the 

timeframe would allow the ASC 

additional time to consider the State 

Appraiser Regulatory Agency’s oral 

presentation in its deliberations. 

Finally, paragraph (e)(3) of proposed 

§ 1102.606 would authorize the ASC to 

grant a waiver extending any time limit 

in connection with a suspension 

proceeding if the ASC deems such a 

waiver to be appropriate. According to 

Policy Statement 12, the ASC may allow 

the filing of a response by the State 

Appraiser Regulatory Agency after the 

designated deadline for good cause 

shown.180 The ASC believes that 

extending the timeframe for any part of 

a suspension proceeding—beyond just 

the State Appraiser Regulatory Agency’s 

response timeframe—is fair and 

reasonable. The ASC would consider 

extensions justified in cases that are 

unanticipated, unforeseeable, and 

beyond the control of the State 

Appraiser Regulatory Agency or the 

ASC. 

G. Procedures Governing NonRecognition Proceedings 

Proposed § 1102.607 would crossreference the existing procedures 

governing non-recognition proceedings 

as set forth in subpart B of 12 CFR part 

1102 to impose the enforcement action 

of non-recognition against a State 

Appraiser Regulatory Agency. 

III. Proposed Implementation Period 

The ASC proposes a 12-month 

implementation period from the 

effective date of any final rule based on 

this proposal. The ASC understands 

that, if finalized, the proposed rule 

would impact the Policy Statements. 

Accordingly, the ASC plans to revise the 

Policy Statements to be consistent with 

any final rule based on this proposal 

before the expiration of the proposed 

implementation period. However, 

during the proposed implementation 

period, the existing Policy Statements 

would continue to apply until revised. 

This compliance period would also give 

State Appraiser Regulatory Agencies 

time to comply with the rule. 

IV. Request for Comment 

The ASC is requesting comments on 

all aspects of this proposal. In addition, 

the ASC requests comments on the 

following questions: 

Question 1. What are the advantages 

and disadvantages of the ASC’s plan to 

extend the review cycle for Appraiser or 

AMC Programs overseen by State 

Appraiser Regulatory Agencies from a 

two-year cycle to a three-year cycle, 

particularly for those State Appraiser 

Regulatory Agencies with an overall 

ASC Finding of Good or Excellent? 

What factors should the ASC consider 

when deciding whether to extend the 

review cycle to three years for Appraiser 

or AMC Programs overseen by State 

Appraiser Regulatory Agencies, 

particularly when there is an overall 

ASC Finding of Good or Excellent? 

Question 2. Section 1118(a)(2) of Title 

XI 181 requires the ASC to monitor State 

Appraiser Regulatory Agencies to 

ensure that the processing of complaints 

and completing investigations occurs in 

a reasonable time period. The proposed 

rule would require that State Appraiser 

Regulatory Agencies resolve all 

complaints against appraisers and 

AMCs within one year (12 months) from 

the date the complaint is received, 

except in special documented 

circumstances. What are the benefits 

and challenges of the ASC’s plan to 

reduce the complaint resolution 

timeframe for State Appraiser 

Regulatory Agencies to a period of time 

between 8 and 11 months? What factors 

should the ASC consider when deciding 

whether to implement this reduction in 

the complaint resolution timeframe? 

Question 3. Are there other mitigating 

or aggravating factors, such as a 

legitimate threat to the integrity of the 

appraiser regulatory framework, 

intentionally-caused unreasonable 

delays, or reasonable reliance on 

competent legal advice, that the ASC 

should consider when deciding whether 

to adjust the initial level of effectiveness 

of Appraiser and AMC Programs as 

determined by the number of 

deficiencies identified in the 

preliminary report? 

Question 4. What barriers, if any, 

might prevent a State Appraiser 

Regulatory Agency from responding to a 

written notice of intention to suspend 

within 20 business days after its 

publication in the Federal Register? If 

such barriers exist, what benefits or 

challenges could arise from extending 

the response timeframe to a period of 

time between 30 and 60 business days? 

Question 5. What barriers, if any, 

might prevent a State Appraiser 

Regulatory Agency from submitting a 

written brief, memorandum, or other 

statement within 40 business days after 

the written notice of intention to 

suspend is published in the Federal 

Register? If such barriers exist, what 

benefits or challenges could result from 

extending the timeframe for filing a 

written brief, memorandum, or other 

statement to a period of time between 50 

and 100 business days? 

Question 6. What barriers, if any, 

might prevent a State Appraiser 

Regulatory Agency from requesting an 

oral presentation within 40 business 

days after the written notice of intention 

to suspend is published in the Federal 

Register? If such barriers exist, what 

benefits or challenges could result from 

extending the timeframe to a period of 

time between 50 and 100 business days? 

Question 7. What factors should the 

ASC consider when deciding whether to 

extend the timeframe for issuing the 

final order from within 80 business days 

after the written notice of intention to 

suspend is published in the Federal 

Register? Additionally, what are the 

advantages and disadvantages of the 

ASC’s plan to extend this timeframe to 

a period of time between 90 and 180 

business days? 

Question 8. What factors should the 

ASC consider when deciding whether to 

extend the timeframe for issuing the 

final order in response to a request for 

an oral presentation within 100 business 

days after the written notice of intention 

to suspend is published in the Federal 

Register? Additionally, what are the 

advantages and disadvantages of 

extending this timeframe to a period of 

time between 120 and 200 business 

days? 

Question 9. What aspects of the 

proposed rule, if any, will be 

challenging for State Appraiser 

Regulatory Agencies to implement 

within 12 months? To the extent such 

challenges exist, what benefits or 

obstacles could result from extending 

the implementation period to a period 

of time between 15 and 18 months? 

What factors should the ASC consider 

when deciding whether to extend the 

implementation period to a period of 

time greater than 12 months? 


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182 5 U.S.C. 553(b)(4). 

183 44 U.S.C. 3501 note. 

184 44 U.S.C. 3501 et seq. 

185 5 CFR part 1320. 

186 5 CFR 1320.4(a)(2). 

187 5 U.S.C. 601 et seq. 

188 Id. 

189See, e.g., 12 U.S.C. 3331, 3332(a)(1), 3346 and 

3347(a). 

190Hawaii’s AMC Program sunset on June 30, 

2023. However, House Bill 2641 was signed into 

law on June 21, 2024, to reenact the version of the 

AMC Program that was originally part of the Hawaii 

Department of Commerce and Consumer Affairs. 

The AMC Program established pursuant to House 

Bill 2641 commenced September 1, 2024. 

191 Government Accountability Office, GAO–03– 

404, Regulatory Programs: Opportunities to 

Enhance Oversight of the Real Estate Appraisal 

Industry, at 2 (2003). 

192The RFA defines ‘‘small entities’’ as small 

businesses, small not-for-profit organizations, and 

small government jurisdictions. See 5 U.S.C. 601(6). 

A ‘‘small business’’ is determined by applying 

Small Business Administration regulations and 

referencing the North American Industry 

Classification System (NAICS) classifications and 

size standards. See 5 U.S.C. 601(3). A ‘‘small 

organization’’ is any ‘‘not-for-profit enterprise 

which is independently owned and operated and is 

not dominant in its field.’’ See 5 U.S.C. 601(4). A 

‘‘small governmental jurisdiction’’ means 

‘‘governments of a city, county, town, township, 

village, school district, or special district with a 

population of less than 50,000.’’ See 5 U.S.C. 

601(5). 

193U.S. Census Bureau, Population Division, 

Annual Estimates of the Resident Population for the 

United States, Regions, States, District of Columbia, 

and Puerto Rico: Apr. 1, 2020, to July 1, 2023 (NST– 

EST2023–POP) (December 2023). 

194 Id. 

195 Id. 

196Central Intelligence Agency, The World 

Factbook, available at https://www.cia.gov/theworld-factbook (visited on Nov. 4, 2024). 

197 Id. American Samoa’s total population was 

43,895. 

198 Id. Guam’s total population was 169,532. 

199 Id. The Commonwealth of the Northern 

Mariana Islands’ total population was 51,118. 

200 Id. The U.S. Virgin Island’s total population 

was 104,377. 

Question 10. In addition to providing 

time for implementation, in what other 

ways should the ASC facilitate 

implementation for State Appraiser 

Regulatory Agencies? 

IV. Regulatory Requirements 

A. Providing Accountability Through 

Transparency Act of 2023 

The Providing Accountability 

Through Transparency Act of 2023 182

requires that a notice of proposed 

rulemaking include the internet address 

of a summary of not more than 100 

words in length of a proposed rule, in 

plain language, that shall be posted on 

the internet website under section 

206(d) of the E-Government Act of 

2002 183 (commonly known as 

regulations.gov). 

The Appraisal Subcommittee (ASC) of 

the Federal Financial Institutions 

Examination Council invites comment 

on a proposed rule to implement a 

framework to govern the ASC’s 

enforcement authority regarding the 

effectiveness of Appraiser and Appraisal 

Management Company (AMC) Programs 

overseen by State Appraiser Regulatory 

Agencies. The proposed rule would 

codify the existing compliance review 

process with modifications. The 

proposed rule would require an analysis 

to assess program effectiveness, outline 

requirements for maintaining effective 

programs, and authorize the ASC to 

bring enforcement actions against such 

agencies that fail to maintain effective 

programs. The proposed rule and 

summary are available at https://

www.regulations.gov. 

B. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (PRA),184 and its 

implementing regulations,185 the ASC 

has reviewed this proposed rule and has 

determined that the information 

collection required by this proposed 

rule is exempt from the coverage of the 

PRA. Each compliance review is an 

audit dependent on the specific facts 

involved because each State Appraiser 

Regulatory Agency has the flexibility to 

design its Appraiser or AMC Programs 

to meet its Title XI responsibilities. Each 

State Appraiser Regulatory Agency may 

face different legal, fiscal, regulatory, or 

other factors that can influence its 

governance structure. Under the 

proposed rule, the collection of 

information would occur during the 

performance of an audit involving the 

ASC against specific entities.186

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency, in 

connection with a proposed rule, to 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of a 

proposed rule on small entities.187

However, the regulatory flexibility 

analysis is not required if an agency 

certifies that the proposed rule would 

not, if adopted, have a significant 

economic impact on a substantial 

number of small entities and publishes 

its certification and a brief explanatory 

statement in the Federal Register with 

the proposed rule.188 For the reasons 

stated below, the ASC believes that the 

proposed rule, if adopted, would not 

have a significant economic impact on 

a substantial number of small entities. 

Title XI requires the ASC to monitor 

the requirements established by States 

that (1) license, certify, and supervise 

appraisers qualified to perform 

appraisals in connection with federally 

related transactions and (2) register and 

supervise the operations and activities 

of AMCs.189 The ASC monitors States 

that have established Appraiser and 

AMC Programs through periodic or 

accelerated compliance reviews. Under 

the proposal, the ASC would conduct an 

analysis as part of its compliance review 

process to assess the effectiveness of 

Appraiser and AMC Programs 

administered by State Appraiser 

Regulatory Agencies. The ASC would be 

authorized to bring an enforcement 

action against a State Appraiser 

Regulatory Agency if the agency fails to 

have an effective Appraiser or AMC 

Program. 

This proposed rule would apply to all 

States that have established Appraiser 

and AMC Programs under Title XI. All 

50 States and the District of Columbia 

have Appraiser and AMC Programs.190

The District of Columbia has two 

separate and distinct agencies—the 

Department of Licensing and Consumer 

Protection and the Department of 

Insurance, Securities and Banking—that 

administer the Appraiser and AMC 

Programs. The Commonwealth of Puerto 

Rico, the Commonwealth of the 

Northern Mariana Islands, Guam, and 

the U.S. Virgin Islands only have 

Appraiser Programs and not AMC 

Programs. American Samoa does not 

have a regulatory oversight structure for 

appraisers because real estate can only 

be inherited.191 As a result, 56 State 

Appraiser Regulatory Agencies would 

be subject to this proposed rule. 

Given the definition of ‘‘small 

entities’’ under the RFA,192 the ASC 

analyzed the population data from the 

U.S. Census Bureau 193 for all 50 States, 

the District of Columbia, and the 

Commonwealth of Puerto Rico to 

determine whether any State Appraiser 

Regulatory Agencies could be 

considered ‘‘small governmental 

jurisdictions.’’ Wyoming was the least 

populated.194 Wyoming’s population 

was estimated to be 576,850 on April 1, 

2020, and has increased to 584,057 on 

July 1, 2023.195 The ASC also analyzed 

the population data from the Central 

Intelligence Agency’s (CIA) World 

Factbook website 196 for the U.S. 

territories of American Samoa,197

Guam,198 the Commonwealth of the 

Northern Mariana Islands,199 and the 

U.S. Virgin Islands.200 American Samoa 

and the Commonwealth of the Northern 

Mariana Islands were the least 

populated. According to the CIA’s 

World Factbook website, American 

Samoa’s total population was 43,895, 

and the Commonwealth of the Northern 


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201 Id. 

202See supra note 192. 

203See supra note 191. 

204See supra note 192. 

205The actual number of State licensed or 

certified real appraisers is probably less because it 

is not uncommon for the same appraiser to hold 

multiple licenses or certifications from the same 

State or different States. The total number of State 

licensed and certified appraisers was current as of 

November 1, 2024. 

206The actual number of AMCs is probably 

significantly less because most AMCs are registered 

in multiple States. The total number of registered 

AMCs was current as of November 1, 2024. 

207Since Hawaii’s AMC Program sunset on June 

30, 2023, Hawaii has not submitted data to the AMC 

Registry. The ASC anticipates that Hawaii will 

begin collecting registry fees and submitting data to 

the AMC Registry once Hawaii has completed its 

implementation phase to re-establish the process for 

collecting AMC registry fees and submitting data to 

the AMC Registry. 

208This data was current as of November 1, 2024. 

209 Id. 

210The ASC’s authority under 12 U.S.C. 3347(a) 

regarding the interim removal of an appraiser or 

AMC from their respective registry is 

distinguishable because the ASC is only authorized 

to do so pending State agency action and State 

Appraiser Regulatory Agencies directly oversee and 

regulate such appraisers and AMCs. In addition, 

that authority is outside of the scope of this 

rulemaking. 

211American Trucking Associations, Inc. v. U.S. 

E.P.A., 175 F.3d 1027, 1044 (1999) (quoting Motor 

& Equipment Manufacturers. Association v. 

Nichols, 142 F.3d 449, 467 & n. 18 (1998)). 

212 Id. at 1045. 

213 2 U.S.C. 1532. 

214 12 U.S.C. 3347. 215 12 U.S.C. 3338(b)(5). 

Mariana Islands’ total population was 

51,118.201 Only American Samoa meets 

the definition of a ‘‘small governmental 

jurisdiction’’ under the RFA, with a 

population of less than 50,000.202

However, American Samoa is not 

subject to the proposed rule because 

American Samoa has not established 

Appraiser and AMC Programs for the 

reasons stated above.203 Therefore, an 

analysis under the RFA is not required 

because the 56 State Appraiser 

Regulatory Agencies are not considered 

small entities 204 under RFA. 

Any economic impact of the proposed 

rule, if adopted, on State licensed and 

certified appraisers and registered 

AMCs would be indirect because real 

estate appraisers and AMCs are not 

subject to the proposed rule. The ASC 

does not also directly oversee or 

regulate the 91,670 State licensed and 

certified real estate appraisers listed on 

the Appraiser Registry 205 reporting from 

55 State Appraiser Regulatory Agencies, 

or 4,943 AMCs listed on the AMC 

Registry 206 reporting from 50 State 

Appraiser Regulatory Agencies.207

California issues the most licenses and 

certifications for real estate appraisers 

(7,803), and the Commonwealth of the 

Northern Mariana Islands issues the 

fewest (5).208 As for AMC registrations, 

Florida registers the most (198), and 

Kentucky registers the fewest (28).209

Additionally, this proposed rule 

would not create additional 

recordkeeping, reporting, and 

compliance requirements on State 

licensed and certified appraisers and 

registered AMCs. Any recordkeeping, 

reporting, and compliance requirements 

are imposed by State law, not this 

proposed rule. The ASC regulates State 

licensed and certified appraisers and 

registered AMCs only indirectly by 

monitoring and enforcing the 

requirements and practices of State 

Appraiser Regulatory Agencies.210 In 

American Trucking Associations, Inc., 

v. the United States Environmental 

Protection Agency, the United States 

Court of Appeals stated, ‘‘[w]e have 

consistently interpreted the RFA, [. . .], 

to impose no obligation upon an agency 

[‘]to conduct a small entity impact 

analysis of effects on entities which it 

does not regulate.[’]’’ 211 The United 

States Court of Appeals further stated, 

‘‘an agency may justify its certification 

under the RFA upon the [‘]factual 

basis[’]that the rule does not directly 

regulate any small entities.’’ 212

Based on this analysis, the ASC 

believes that the proposed rule, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. Therefore, the 

ASC certifies that the proposed rule, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. Accordingly, 

an initial regulatory flexibility analysis 

is not required. The ASC requests 

comment on all aspects of this analysis. 

D. The Unfunded Mandates Reform Act 

of 1995 Determination 

Although the Unfunded Mandates 

Reform Act of 1995 (UMRA) 213 does not 

apply to independent agencies, the ASC 

voluntarily analyzed the proposed rule 

under the factors in the UMRA. Under 

this analysis, the ASC considered 

whether the proposed rule includes a 

Federal mandate that may result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year (adjusted annually for 

inflation). For the following reason, the 

ASC finds that the proposed rule does 

not trigger the $100 million UMRA 

thresholds. First, the costs specifically 

related to requirements set forth in law 

are excluded from expenditures under 

the UMRA. Given that the proposed rule 

reflects requirements arising from 

section 1118 of Title XI,214 the UMRA 

cost estimate for the proposal, if 

implemented, is zero. Second, such 

costs to State, local, and Tribal 

governments may be paid with Federal 

financial assistance. Section 1109(b)(5) 

of Title XI 215 allows the ASC to make 

grants to State Appraiser Regulatory 

Agencies to support the efforts of such 

agencies to comply with Title XI, such 

as the complaint process, complaint 

investigations, appraiser enforcement 

activities, and the submission of data on 

State licensed and certified appraisers to 

the Appraiser Registry or AMCs to the 

AMC Registry. For these reasons, the 

ASC has determined that this proposed 

rule will not result in expenditures by 

State, local, and Tribal governments, or 

the private sector, of $100 million or 

more in any one year. Accordingly, this 

proposal is not subject to section 202 of 

the UMRA. 

List of Subjects in 12 CFR Part 1102 

Administrative practice and 

procedure, Appraisal management 

companies, Appraisal management 

company registry fees, Appraisers, 

Banks, banking, Enforcement actions, 

Freedom of information, Investigations, 

Licensing and registration, Mortgages, 

Organization and functions 

(Government agencies), Privacy, 

Reporting and recordkeeping 

requirements, and State and local 

governments. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Federal Financial 

Institutions Examination Council 

proposes to amend 12 CFR part 1102 as 

follows: 

PART 1102—APPRAISER 

REGULATION 

■ 1. The authority citation for part 1102 

is revised to read as follows: 

Authority: 12 U.S.C. 3332, 3335, 

3338(a)(4)(B), 3347, 3348(a), 3348(b), 3348(c), 

5 U.S.C. 552a, 553(e); E.O. 12600, 52 FR 

23781, 3 CFR, 1987 Comp., p. 235. 

■ 2. Subpart F to part 1102 is added to 

read as follows: 

Subpart F—Appraisal Subcommittee 

Enforcement Authority Regarding the 

Effectiveness of State Appraiser and 

Appraisal Management Company 

Regulatory Programs 

Sec. 

1102.600 Authority, purpose, and scope. 

1102.601 Definitions. 

1102.602 Compliance reviews. 

1102.603 Analysis of a regulatory program’s 

effectiveness. 

1102.604 Mitigating and aggravating factors. 

1102.605 Enforcement actions. 


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1102.606 Procedures governing suspension 

proceedings. 

1102.607 Procedures governing nonrecognition proceedings. 

§ 1102.600 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

by the Appraisal Subcommittee (ASC) 

under sections 1103, 1106, and 1118 of 

Title XI of the Financial Institutions 

Reform, Recovery, and Enforcement Act 

of 1989 (Pub. L. 101–73, 103 Stat. 183 

(1989)), as amended by the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) (Pub. 

L. 111–203, 124 Stat. 1376 (2010)), 12 

U.S.C. 3332, 3335, and 3347 (Title XI). 

(b) Purpose and scope. The purpose of 

this subpart is to implement the ASC’s 

monitoring and enforcement authority 

pursuant to section 1118 of Title XI (12 

U.S.C. 3347) regarding the effectiveness 

of appraiser and appraisal management 

company regulatory programs 

administered by State Appraiser 

Regulatory Agencies. This subpart 

applies to all State Appraiser Regulatory 

Agencies. 

§ 1102.601 Definitions. 

For the purposes of this subpart: 

AMC Registry means the national 

registry maintained by the ASC of 

entities that meet the Federal definition 

of an AMC, as defined in 12 U.S.C. 

3350(11), are either registered by a State 

or are federally regulated AMCs and 

have paid the annual AMC registry fee. 

AMC Registry Fee Rule means the 

ASC’s regulations on the collection and 

transmission of AMC Registry fees as 

codified in subpart E of this part. 

AMC Rule means regulations 

established by the Office of the 

Comptroller of the Currency, the Board 

of Governors of the Federal Reserve 

System, the Federal Deposit Insurance 

Corporation, and the Federal Housing 

Finance Agency regarding the minimum 

requirements for AMCs under section 

1124 of Title XI (12 U.S.C. 3353). (12 

CFR 34.210 through 34.216; 12 CFR 

225.190 through 225.196; 12 CFR 323.8 

through 323.14; 12 CFR 1222.20 through 

1222.26). 

Appraisal management company 

(AMC) means: 

(1) A person that: 

(i) Provides appraisal management 

services to creditors or to secondary 

mortgage market participants, including 

affiliates as defined in 12 U.S.C. 1841; 

(ii) Provides such services in 

connection with valuing a consumer’s 

principal dwelling as security for a 

consumer credit transaction or 

incorporating such transactions into 

securitizations; and 

(iii) Within a given 12-month period, 

oversees an appraiser panel of more 

than 15 State certified or State licensed 

appraisers in a State or 25 or more State 

certified or State licensed appraisers in 

two or more States. 

(2) An AMC does not include a 

department or division of an entity that 

provides appraisal management services 

only to that entity. 

Appraisal management services mean 

one or more of the following: 

(1) Recruiting, selecting, and retaining 

appraisers; 

(2) Contracting with State certified or 

State licensed appraisers to perform 

appraisal assignments; 

(3) Managing the process of having an 

appraisal performed, including 

providing administrative services such 

as receiving appraisal orders and 

appraisal reports, submitting completed 

appraisal reports to creditors and 

secondary market participants, 

collecting fees from creditors and 

secondary market participants for 

services provided, and paying 

appraisers for services performed; and 

(4) Reviewing and verifying the work 

of appraisers. 

Appraiser panel means a network, list 

or roster of licensed or certified 

appraisers approved by an AMC to 

perform appraisals as independent 

contractors for the AMC. Appraisers on 

an AMC’s ‘‘appraiser panel’’ under this 

subpart include both appraisers 

accepted by the AMC for consideration 

for future appraisal assignments in 

covered transactions or for secondary 

mortgage market participants in 

connection with covered transactions 

and appraisers engaged by the AMC to 

perform one or more appraisals in 

covered transactions or for secondary 

mortgage market participants in 

connection with covered transactions. 

An appraiser is an independent 

contractor for purposes of this subpart if 

the appraiser is treated as an 

independent contractor by the AMC for 

purposes of Federal income taxation. 

Appraisal Subcommittee (ASC) means 

the Appraisal Subcommittee of the 

Federal Financial Institutions 

Examination Council established under 

the Federal Financial Institutions 

Examination Council Act of 1978 (12 

U.S.C. 3301 et seq.) as amended by 

section 1102 of Title XI (12 U.S.C. 

3310). 

Appraiser Registry means the national 

registry maintained by the ASC of State 

licensed and certified appraisers, as 

defined in 12 U.S.C. 3345, who are 

eligible to perform appraisals in 

federally related transactions and have 

paid the annual appraiser registry fee. 

AQB Criteria means the minimum 

requirements for the licensure and 

certification of real estate appraisers and 

the minimum requirements for trainee 

and supervisory appraisers established 

by the Appraiser Qualifications Board of 

the Appraisal Foundation as 

contemplated by 12 U.S.C. 3345. 

Assignment means, for purposes of 

this subpart with respect to temporary 

practice, one or more real estate 

appraisals and written appraisal 

report(s) covered by a single contractual 

agreement. 

Consumer credit means credit offered 

or extended to a consumer primarily for 

personal, family, or household 

purposes. 

Covered transaction means any 

consumer credit transaction secured by 

the consumer’s principal dwelling. 

Days means business days. The date 

of the act, event, or default from which 

the designated period begins to run is 

omitted, and the last day is included. 

Deficiency means the ASC’s 

determination that a State Appraiser 

Regulatory Agency has not 

demonstrated to the ASC’s reasonable 

satisfaction that its regulatory program 

is operating consistently with the 

specified requirements of a program 

function as set forth in § 1102.603(c). 

Dwelling means: 

(1) A residential structure that 

contains one to four units, whether or 

not that structure is attached to real 

property. The term includes an 

individual condominium unit, 

cooperative unit, mobile home, and 

trailer, if it is used as a residence. 

(2) A consumer can have only one 

‘‘principal’’ dwelling at a time. Thus, a 

vacation or other second home would 

not be a principal dwelling. However, if 

a consumer buys or builds a new 

dwelling that will become the 

consumer’s principal dwelling within a 

year or upon the completion of 

construction, the new dwelling is 

considered the principal dwelling for 

purposes of this subpart. 

Federally regulated AMC means an 

AMC that is owned and controlled by an 

insured depository institution, as 

defined in 12 U.S.C. 1813 and regulated 

by the Office of the Comptroller of the 

Currency, the Board of Governors of the 

Federal Reserve System, or the Federal 

Deposit Insurance Corporation. 

Federally related transaction means 

any real estate-related financial 

transaction which: 

(1) A Federal financial institutions 

regulatory agency engages in, contracts 

for, or regulates; and 

(2) Requires the services of an 

appraiser under the appraisal rules 

(Title XI, section 1121(4), 12 U.S.C. 

3350(4), implemented by the Office of 

the Comptroller of the Currency: 12 CFR 

part 34; Federal Reserve Board: 12 CFR 


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part 225; Federal Deposit Insurance 

Corporation: 12 CFR part 323; and 

National Credit Union Administration: 

12 CFR part 722). 

Final order means an order issued by 

the ASC that includes findings of fact, 

conclusions of law, and, if applicable, 

the terms of a related enforcement 

action imposed against a State 

Appraiser Regulatory Agency for failing 

to have an effective regulatory program. 

Final report means a document that 

records the ASC’s final monitoring 

findings and analysis of the regulatory 

program’s effectiveness, as required in 

§ 1102.603, identifying any deficiencies. 

The final report also includes the ASC’s 

final assessment of the regulatory 

program’s level of effectiveness, 

adjusted for the State Appraiser 

Regulatory Agency’s response to the 

preliminary report and relevant 

mitigating and aggravating factors in 

§ 1102.604. 

Financial institution means an 

insured depository institution as 

defined in section 3 of the Federal 

Deposit Insurance Act (12 U.S.C. 1813) 

or an insured credit union as defined in 

section 101 of the Federal Credit Union 

Act (12 U.S.C. 1752). 

Negotiated agreement means a written 

agreement signed between the ASC and 

a State Appraiser Regulatory Agency to 

correct deficiencies that negatively 

impact the regulatory program’s 

effectiveness. The agreement may 

provide that the State Appraiser 

Regulatory Agency commits to taking a 

certain action or actions or to refraining 

from a certain action or actions by a 

specified time. 

Non-recognition means the ASC and 

all agencies, instrumentalities, and 

federally recognized entities under Title 

XI shall not recognize or accept 

appraiser licenses and certifications 

issued by a State Appraiser Regulatory 

Agency whose policies, practices, 

funding, staffing, or procedures are 

found to be inconsistent with Title XI 

and Federal regulations promulgated 

thereunder. ‘‘Non-recognition’’ is 

synonymous with ‘‘derecognition,’’ 

which is referenced in section 1118 of 

Title XI (12 U.S.C. 3347). 

Person means a natural person or an 

organization, including a corporation, 

partnership, proprietorship, association, 

cooperative, estate, trust, or government 

unit. 

Preliminary report means a document 

that records the initial monitoring 

findings and analysis of the regulatory 

program’s effectiveness, as required in 

§ 1102.603, identifying any deficiencies. 

The preliminary report also includes the 

ASC’s initial assessment of the 

program’s level of effectiveness. 

Program functions mean those 

responsibilities of a State Appraiser 

Regulatory Agency that the ASC will 

examine and include in its analysis of 

the effectiveness of a State Appraiser 

Regulatory Agency’s regulatory 

program, consistent with section 1118(a) 

of Title XI (12 U.S.C. 3347(a)). 

(1) There are five program functions 

for State appraiser regulatory programs: 

(i) Licensing and certification of 

appraisers; 

(ii) Issuance of temporary licenses and 

certifications for appraisers; 

(iii) Receiving and tracking of 

submitted complaints against 

appraisers; 

(iv) Investigation of complaints 

against appraisers; and 

(v) Enforcement actions against 

appraisers. 

(2) There are four program functions 

for State AMC regulatory programs: 

(i) Registration of AMCs; 

(ii) Receiving and tracking of 

submitted complaints against AMCs; 

(iii) Investigation of complaints 

against AMCs; and 

(iv) Enforcement actions against 

AMCs. 

Secretary means the Secretary of the 

ASC under its Rules of Operation. 

Special documented circumstances 

mean well-documented and monitored 

extenuating circumstances, evaluated by 

the ASC, that are beyond the control of 

the State Appraiser Regulatory Agency 

and result in a complaint processing 

delay. 

State means any State of the United 

States, the District of Columbia, the 

Commonwealth of Puerto Rico, the 

Commonwealth of the Northern Mariana 

Islands, Guam, the U.S. Virgin Islands, 

and American Samoa. 

State Appraiser Regulatory Agency 

means a State agency that certifies and 

licenses real estate appraisers and 

registers and supervises AMCs or 

otherwise regulates real estate 

appraisers and AMCs who operate in 

that State consistent with section 

1121(1) of Title XI (12 U.S.C. 3350(1)). 

‘‘State Appraiser Regulatory Agency’’ is 

synonymous with ‘‘State appraiser 

certifying and licensing agency’’ as 

defined in section 1121(1) of Title XI (12 

U.S.C. 3350(1)). To the extent that the 

registration and supervision of AMCs is 

carried out by a separate and distinct 

agency or agencies within a State, each 

such agency is also a State Appraiser 

Regulatory Agency. 

State certified appraiser means an 

individual who has satisfied the 

requirements for certification in a State 

whose criteria for certification as a real 

estate appraiser meet or exceed the 

applicable minimum AQB Criteria as 

prescribed in section 1116(a) and (b) of 

Title XI (12 U.S.C. 3345(a) and (b)). 

State licensed appraiser means an 

individual who has satisfied the 

requirements for licensing in a State 

whose criteria for the licensing of a real 

estate appraiser meet or exceed the 

applicable minimum AQB Criteria as 

prescribed in section 1116(c) of Title XI 

(12 U.S.C. 3345(c)). 

Supervisory appraiser means an 

individual who has satisfied the 

requirements in a State whose 

applicable requirements for supervision 

of a trainee appraiser meet or exceed the 

applicable minimum AQB Criteria as 

prescribed in section 1116(e) of Title XI 

(12 U.S.C. 3345(e)). 

Suspension means the State Appraiser 

Regulatory Agency is prohibited from 

performing a certain task or certain tasks 

as part of the State Appraiser Regulatory 

Agency’s responsibilities under Title XI 

for a specified period of time as stated 

in the final order. The suspension 

remains in effect until the suspension is 

lifted by the ASC. The ASC may lift the 

suspension on the finding that the terms 

and conditions of the final order are 

satisfied. 

Trainee appraiser means an 

individual who has satisfied the 

requirements in a State whose 

applicable requirements meet or exceed 

the applicable minimum AQB Criteria 

as prescribed in section 1116(e) of Title 

XI (12 U.S.C. 3345(e)). 

Uniform Standards of Professional 

Appraisal Practice (USPAP) means the 

appraisal standards promulgated by the 

Appraisal Standards Board of the 

Appraisal Foundation. 

Warning letter means a letter issued 

by the ASC informing a State Appraiser 

Regulatory Agency of a deficiency or 

deficiencies relating to its regulatory 

program that, if not addressed, could 

negatively impact the regulatory 

program’s effectiveness. 

§ 1102.602 Compliance reviews. 

(a) Monitoring of State appraiser and 

AMC regulatory programs. The ASC 

shall monitor appraiser and AMC 

regulatory programs administered by 

State Appraiser Regulatory Agencies in 

accordance with sections 1103(a)(1) and 

1118(a) of Title XI (12 U.S.C. 3332(a)(1) 

and 3347(a)). 

(b) Frequency of compliance reviews. 

(1) The ASC will conduct compliance 

reviews on either a two-year cycle or 

one-year cycle as part of its routine 

monitoring but may use an alternate 

review schedule at its sole discretion. 

(2) The ASC may conduct follow-up 

reviews and additional monitoring on 

specific areas identified during a 

compliance review. The ASC may 


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schedule a follow-up review within 6 to 

12 months after the previous 

compliance review or at a time deemed 

appropriate by the ASC. 

(3) The ASC may conduct accelerated 

compliance reviews when there are 

indications that a regulatory program 

might not be operating consistently with 

Title XI or Federal regulations 

promulgated thereunder. 

(4) When a State Appraiser Regulatory 

Agency oversees both appraiser and 

AMC regulatory programs, the ASC may 

assign each regulatory program the same 

or different review cycles. 

(c) Performance of compliance 

reviews. (1) During compliance reviews, 

the ASC will examine records and may 

conduct interviews with State Appraiser 

Regulatory Agency representatives. 

(2) After completing the examination 

of records and interviews, the ASC will 

prepare the preliminary report that 

includes the ASC’s initial determination 

of the level of effectiveness of the 

regulatory program as outlined in 

§ 1102.603(b). 

(3) A State Appraiser Regulatory 

Agency may respond within 60 days 

from the date of the preliminary report. 

The response may include additional 

documentation showing the State 

Appraiser Regulatory Agency’s efforts to 

remedy any findings or deficiencies 

identified in the preliminary report. The 

ASC may, on its own initiative or for 

good cause shown, issue a waiver 

extending the 60-day time limit in 

connection with a State Appraiser 

Regulatory Agency’s response to the 

preliminary report under this section. 

(4) After receiving the State Appraiser 

Regulatory Agency’s response to the 

preliminary report, the ASC will 

prepare a final report that includes the 

ASC’s final determination of the level of 

effectiveness of the regulatory program 

as outlined in § 1102.603(b). 

(d) Responsibilities of State Appraiser 

Regulatory Agencies. State Appraiser 

Regulatory Agencies must maintain 

sufficient documentation to demonstrate 

that their appraiser and AMC regulatory 

programs operate consistently with Title 

XI and Federal regulations promulgated 

thereunder. Documentation must be 

made available for inspection, as 

requested by the ASC, including access 

to the information stored in any 

electronic system or providing access to 

the electronic system itself. 

§ 1102.603 Analysis of a regulatory 

program’s effectiveness. 

(a) Analysis of the regulatory 

program’s effectiveness. The ASC will 

assess the effectiveness of a regulatory 

program, as required by section 1118 of 

Title XI (12 U.S.C. 3347), by conducting 

an analysis of the applicable program 

functions. The ASC will examine 

whether the State Appraiser Regulatory 

Agency’s regulatory program is 

operating consistently with the 

specified requirements of each program 

function in paragraph (c) of this section. 

If any deficiencies are found, the ASC 

will document the deficiencies in both 

the preliminary and final reports 

consistent with this subpart. 

(b) Assessment of the regulatory 

program’s effectiveness—(1) Initial 

assessment of the regulatory program’s 

effectiveness. The ASC will assess the 

initial effectiveness of a State appraiser 

or AMC regulatory program on the basis 

of the number of deficiencies per 

program function as identified in the 

preliminary report as follows: 

(i) Effective regulatory program. (A) A 

State appraiser regulatory program is 

considered ‘‘effective’’ if there is no 

more than one deficiency in each of not 

more than two separate program 

functions. 

(B) A State AMC regulatory program 

is considered ‘‘effective’’ if there is no 

more than one deficiency in any single 

program function. 

(ii) Moderately effective regulatory 

program. (A) A State appraiser 

regulatory program is considered 

‘‘moderately effective’’ if there is no 

more than one deficiency in each of not 

more than three separate program 

functions or no more than two 

deficiencies in one program function. 

(B) A State AMC regulatory program 

is considered ‘‘moderately effective’’ if 

there is no more than one deficiency in 

each of not more than two separate 

program functions. 

(iii) Slightly effective regulatory 

program. (A) A State appraiser 

regulatory program is considered 

‘‘slightly effective’’ if there is no more 

than one deficiency in each of not more 

than four separate program functions, 

no more than two deficiencies in each 

of two separate program functions, or no 

more than three deficiencies in one 

program function. 

(B) A State AMC regulatory program 

is considered ‘‘slightly effective’’ if there 

is no more than one deficiency in each 

of not more than three separate program 

functions or no more than two 

deficiencies in one program function. 

(iv) Ineffective regulatory program. 

(A) A State appraiser regulatory program 

is considered ‘‘ineffective’’ if there are 

one or more deficiencies in each of five 

separate program functions, two or more 

deficiencies in each of three or more 

separate program functions, or four or 

more deficiencies in one or more 

program functions. 

(B) A State AMC regulatory program 

is considered ‘‘ineffective’’ if there are 

one or more deficiencies in each of four 

separate program functions, two or more 

deficiencies in each of two or more 

separate program functions, or three or 

more deficiencies in one or more 

program functions. 

(2) Final assessment of the regulatory 

program’s effectiveness. The ASC will 

consider whether the State Appraiser 

Regulatory Agency’s response to the 

preliminary report and any relevant 

mitigating and aggravating factors in 

§ 1102.604 justify an increase or 

decrease in the level of the regulatory 

program’s effectiveness for the final 

report. 

(c) Specified requirements of the 

applicable program functions for State 

appraiser and AMC regulatory 

programs—(1) State appraiser 

regulatory program. A State Appraiser 

Regulatory Agency must demonstrate to 

the ASC’s reasonable satisfaction that its 

appraiser regulatory program is 

operating consistently with the 

specified requirements of each program 

function: 

(i) Licensing and certification of 

appraisers. (A) The State Appraiser 

Regulatory Agency’s licensing and 

certification requirements must meet the 

minimum requirements set forth in 

section 1116 of Title XI (12 U.S.C. 

3345). 

(B) The State Appraiser Regulatory 

Agency’s trainee and supervisory 

appraiser requirements, if applicable, 

must meet the minimum requirements 

set forth in section 1116 of Title XI (12 

U.S.C. 3345). 

(C) The State Appraiser Regulatory 

Agency must use the designations for 

trainee appraisers, State licensed 

appraisers, and State certified appraisers 

in accordance with section 1116 of Title 

XI (12 U.S.C. 3345). 

(D) The State Appraiser Regulatory 

Agency must use permitted scopes of 

practice for State licensed and certified 

appraisers in accordance with sections 

1113 and 1114 of Title XI (12 U.S.C. 

3342 and 3343). 

(E) The State Appraiser Regulatory 

Agency must process applications in a 

timely, consistent, equitable, and welldocumented manner in accordance with 

Title XI. 

(F) The State Appraiser Regulatory 

Agency must ensure that individuals 

who process applications are 

knowledgeable about section 1116 of 

Title XI (12 U.S.C. 3345) as evaluated by 

the ASC. 

(G) The State Appraiser Regulatory 

Agency must have a reciprocity policy 

for issuing a reciprocal license or 

certification for an individual from 


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another State in accordance with section 

1122(b) of Title XI (12 U.S.C. 3351(b)). 

(H) The State Appraiser Regulatory 

Agency must ensure that all approved 

applicants meet the applicable 

minimum requirements of the AQB 

Criteria. 

(I) The State Appraiser Regulatory 

Agency must ensure that appraiser 

education courses are consistent with 

the AQB Criteria. 

(J) The State Appraiser Regulatory 

Agency must obtain and maintain 

sufficient documentation pertaining to 

all applications, including initial 

licenses or certifications, upgrades, 

renewals, reinstatements, and 

supervisory approvals, to create a record 

of facts and determinations and the 

reasons for those determinations made 

by the State Appraiser Regulatory 

Agency. 

(K) The State Appraiser Regulatory 

Agency must report appraiser data on 

the issuance and renewal of licenses 

and certifications on a timely basis to 

the Appraiser Registry in accordance 

with section 1109(a)(2) of Title XI (12 

U.S.C. 3338(a)(2)). 

(ii) Issuance of temporary licenses 

and certifications for appraisers. (A) 

The State Appraiser Regulatory Agency 

must recognize the license or 

certification of an appraiser issued by 

another State Appraiser Regulatory 

Agency on a temporary basis in 

accordance with section 1122(a)(1) of 

Title XI (12 U.S.C. 3351(a)(1)). 

(B) The State Appraiser Regulatory 

Agency must not impose excessive fees 

for a temporary license or certification 

in accordance with section 1122(a)(2) of 

Title XI (12 U.S.C. 3351(a)(2)). 

(C) The State Appraiser Regulatory 

Agency must not impose burdensome 

requirements, as determined by the 

ASC, for temporary practice in 

accordance with section 1122(a)(2) of 

Title XI (12 U.S.C. 3351(a)(2)). 

(D) The State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications within five days after 

receiving a complete application for 

such issuance in accordance with 

section 1122(a) of Title XI (12 U.S.C. 

3351(a)). 

(E) The State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications on an assignment basis 

and must allow for at least one 

extension through a streamlined process 

in accordance with section 1122(a) of 

Title XI (12 U.S.C. 3351(a)). 

(F) The State Appraiser Regulatory 

Agency must issue temporary licenses 

or certifications designating the effective 

date in accordance with section 1122(a) 

of Title XI (12 U.S.C. 3351(a)). 

(G) The State Appraiser Regulatory 

Agency must track all temporary 

licenses or certifications using a permit 

log or system. 

(H) The State Appraiser Regulatory 

Agency must supervise all individuals 

to whom the State Appraiser Regulatory 

Agency issues a temporary license or 

certification while performing 

assignments in its State, must discipline 

such individuals, when appropriate, for 

misconduct or wrongdoing, and must 

report each disciplinary action to the 

ASC and other appropriate State 

Appraiser Regulatory Agencies to 

ensure effective supervision in 

accordance with sections 1117, 1118, 

and 1122(a) of Title XI (12 U.S.C. 3346, 

3347, and 3351(a)). 

(I) The State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the basis for the 

determinations made by the State 

Appraiser Regulatory Agency in 

processing and issuing temporary 

licenses or certifications. 

(iii) Receiving and tracking of 

submitted complaints against 

appraisers. (A) The State Appraiser 

Regulatory Agency must have a system 

for processing and investigating 

complaints and sanctioning trainee 

appraisers, State licensed appraisers, 

and State certified appraisers in a 

timely, effective, consistent, equitable, 

and well-documented manner. 

(B) The State Appraiser Regulatory 

Agency must track and monitor all 

complaints using a complaint log or 

system. 

(iv) Investigation of complaints 

against appraisers. (A) The State 

Appraiser Regulatory Agency must 

require appraisals to be performed in 

accordance with the latest version of 

USPAP in accordance with sections 

1101 and 1103(a)(1)(A) of Title XI (12 

U.S.C. 3331 and 3332(a)(1)(A)). 

(B) When examining an appraisal 

report in connection with a complaint, 

including complaints based solely on 

value, the State Appraiser Regulatory 

Agency must consider whether any 

potential violations of USPAP should be 

investigated. 

(C) To ensure effective supervision, 

the State Appraiser Regulatory Agency 

must resolve all complaints filed against 

trainee appraisers, State licensed 

appraisers, and State certified appraisers 

within one year (12 months) from the 

date the complaint was received except 

in special documented circumstances. 

(D) The State Appraiser Regulatory 

Agency must ensure that individuals 

who analyze complaints are 

knowledgeable about Title XI, USPAP, 

and appraisal practices and must 

document how such individuals are 

qualified, which will be evaluated by 

the ASC. 

(E) The State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the facts and determinations 

made by the State Appraiser Regulatory 

Agency in processing and investigating 

a complaint and the reasons for its final 

disposition. 

(v) Enforcement actions against 

appraisers. (A) The State Appraiser 

Regulatory Agency must supervise 

trainee appraisers, State licensed 

appraisers, and State certified appraisers 

and must discipline such individuals, 

when appropriate, for misconduct and 

wrongdoing. 

(B) The State Appraiser Regulatory 

Agency must report all disciplinary 

actions against State licensed and 

certified appraisers to the ASC within 

five days after the disciplinary action is 

final as determined by State law. 

(2) State AMC regulatory program. A 

State Appraiser Regulatory Agency must 

demonstrate to the ASC’s reasonable 

satisfaction that its AMC regulatory 

program is operating consistently with 

the stated requirements of each program 

function: 

(i) Registration of AMCs. (A) The State 

Appraiser Regulatory Agency must 

establish and maintain an AMC 

regulatory program with legal authority 

and mechanisms consistent with Title 

XI, the AMC Rule, and the AMC 

Registry Fee Rule. 

(B) The State Appraiser Regulatory 

Agency must impose requirements on 

AMCs that are consistent with Title XI 

and the AMC Rule. 

(C) The State Appraiser Regulatory 

Agency must enforce and document 

ownership limitations for AMCs in a 

manner consistent with Title XI and the 

AMC Rule. 

(D) The State Appraiser Regulatory 

Agency must process AMC applications 

in a timely, consistent, equitable, and 

well-documented manner in accordance 

with Title XI, the AMC Rule, and the 

AMC Registry Fee Rule. 

(E) The State Appraiser Regulatory 

Agency must ensure that individuals 

who process applications are 

knowledgeable about Title XI and the 

AMC Rule as evaluated by the ASC. 

(F) The State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the basis for its determinations 

for AMC eligibility for the AMC 

Registry, including the appraiser panel 

requirements, ownership limitations, 

and AMC Registry fee collection and 

submission to the ASC. 


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(G) The State Appraiser Regulatory 

Agency must report AMCs eligible for 

the AMC Registry on a timely basis to 

the ASC in accordance with section 

1109(a)(3) of Title XI (12 U.S.C. 

3338(a)(3)) and the AMC Registry Fee 

Rule. 

(ii) Receiving and tracking of 

submitted complaints against AMCs. (A) 

The State Appraiser Regulatory Agency 

must have a system for processing and 

investigating complaints and 

sanctioning AMCs (other than federally 

regulated AMCs) in a timely, effective, 

consistent, equitable, and welldocumented manner. 

(B) The State Appraiser Regulatory 

Agency must track and monitor all 

complaints against AMCs using a 

complaint log or system. 

(iii) Investigation of complaints 

against AMCs. (A) To ensure effective 

supervision, the State Appraiser 

Regulatory Agency must resolve all 

complaints filed against AMCs (other 

than federally regulated AMCs) within 

one year (12 months) from the date the 

complaint was received except in 

special documented circumstances. 

(B) The State Appraiser Regulatory 

Agency must ensure that individuals 

who analyze complaints are 

knowledgeable about Title XI, the AMC 

Rule, USPAP, and appraisal practices 

and must document how such 

individuals are qualified, which will be 

evaluated by the ASC. 

(C) The State Appraiser Regulatory 

Agency must obtain and maintain 

documentation sufficient to create a 

record of the facts and determinations 

made by the State Appraiser Regulatory 

Agency in processing and investigating 

a complaint and the reasons for its final 

disposition. 

(iv) Enforcement actions against 

AMCs. (A) The State Appraiser 

Regulatory Agency must supervise 

AMCs (other than federally regulated 

AMCs) and must discipline such 

entities, when appropriate, for 

misconduct and wrongdoing. 

(B) The State Appraiser Regulatory 

Agency must report all disciplinary 

actions against AMCs (other than 

federally regulated AMCs) to the ASC 

within five days after the disciplinary 

action is final as determined by State 

law. 

§ 1102.604 Mitigating and aggravating 

factors. 

The ASC will consider the following 

factors, which may be mitigating or 

aggravating as appropriate, in adjusting 

the ASC’s initial assessment of the level 

of effectiveness of the regulatory 

program identified in the preliminary 

report. The mitigating or aggravating 

factors include: 

(a) The nature and extent of the 

deficiency, which includes: 

(1) The type of deficiency; 

(2) Whether any deficiencies indicate 

systemic issues in the regulatory 

program; and 

(3) The severity of the deficiency, and 

the extent to which the deficiency can 

be corrected or, if not corrected in a 

timely manner, whether the deficiency 

poses a potential risk to the regulatory 

program, appraisers, AMCs, financial 

institutions, or the public. 

(b) Prior compliance history by the 

State Appraiser Regulatory Agency, 

which includes: 

(1) Whether the regulatory program 

has had any prior deficiencies; 

(2) Whether the deficiency is the same 

as or similar to prior deficiencies; 

(3) Whether the State Appraiser 

Regulatory Agency’s practices or actions 

indicate a pattern of similar prior 

deficiencies or a fundamental failure to 

understand the risks and controls that 

underlie a program function; and 

(4) Whether, and to what extent, the 

State Appraiser Regulatory Agency 

attempted to correct prior deficiencies. 

(c) The structure, stability, and 

responsiveness of the State Appraiser 

Regulatory Agency, which include: 

(1) The level of cooperation with the 

ASC staff during a compliance review; 

(2) The extent of understanding and 

acknowledgment of the deficiency; 

(3) The level of responsiveness and 

willingness to correct the deficiency; 

(4) Whether the regulatory program 

has undergone significant staffing or 

leadership changes; 

(5) Any submission of false statements 

or documents, or deceptive practices by 

the State Appraiser Regulatory Agency; 

(6) Whether the State Appraiser 

Regulatory Agency failed to exercise 

reasonable care toward equitable, 

consistent, and timely enforcement; and 

(7) The number of State licensed and 

certified appraisers or registered AMCs 

under the jurisdiction of the State 

Appraiser Regulatory Agency; and 

(8) The risk of program failure. 

(d) Other situations or circumstances 

may include natural or human-made 

disasters or emergencies or other 

government-declared orders. 

§ 1102.605 Enforcement actions. 

(a) Interim enforcement actions. The 

ASC may undertake an interim 

enforcement action against a State 

Appraiser Regulatory Agency that fails 

to have an effective regulatory program 

as determined by the ASC as set forth 

in § 1102.603(b). Interim enforcement 

actions may consist of the following 

actions: 

(1) Warning letter. The ASC may issue 

a warning letter to a State Appraiser 

Regulatory Agency when the final report 

indicates that the regulatory program is 

moderately effective or slightly 

effective. 

(2) Negotiated agreement. The ASC 

may enter into a negotiated agreement 

with a State Appraiser Regulatory 

Agency if the State Appraiser 

Regulatory Agency fails to address the 

deficiency or deficiencies identified in a 

previously issued warning letter, or the 

final report indicates that the regulatory 

program is slightly effective or 

ineffective. 

(3) Suspension. The ASC may 

suspend a State Appraiser Regulatory 

Agency for an interim period, as 

outlined in the procedures within 

§ 1102.606, if the State Appraiser 

Regulatory Agency refuses to enter into 

a negotiated agreement, the State 

Appraiser Regulatory Agency fails to 

comply with the terms and conditions 

of a negotiated agreement, or the final 

report indicates that the regulatory 

program is ineffective. The suspension 

may involve, but is not limited to, the 

State Appraiser Regulatory Agency’s 

ability to perform one or more of the 

following tasks: 

(i) Addition of State licensed or 

certified appraisers to the Appraiser 

Registry or AMCs to the AMC Registry; 

(ii) Issuance of upgrades of 

individuals’ level of licensure or 

certification to perform appraisals in 

connection with federally related 

transactions; 

(iii) Renewal of licenses or 

certifications of State licensed or 

certified appraisers for the performance 

of appraisals in connection with 

federally related transactions; or 

(iv) Issuance of temporary licenses or 

certifications to individuals who are 

licensed or certified in another State to 

perform appraisals in connection with 

federally related transactions in the 

suspended State Appraiser Regulatory 

Agency’s State, as set forth in section 

1122(a) of Title XI (12 U.S.C. 3351(a)). 

(b) Non-recognition. The ASC may 

undertake non-recognition, as 

prescribed in the procedures within 

subpart B of this part, if the ASC issues 

a written finding pursuant to section 

1118(b) of Title XI (12 U.S.C. 3347(b)) 

that the State Appraiser Regulatory 

Agency’s policies, practices, funding, 

staffing, or procedures are inconsistent 

with Title XI and Federal regulations 

promulgated thereunder and: 

(1) a State Appraiser Regulatory 

Agency fails to comply with a final 

order of suspension; or 

(2) the final report indicates the 

regulatory program is ineffective. 


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§ 1102.606 Procedures governing 

suspension proceedings. 

The ASC must adhere to the following 

procedures to suspend a State Appraiser 

Regulatory Agency. 

(a) Notice. (1) The ASC must provide 

the State Appraiser Regulatory Agency 

with a written notice of intention to 

suspend the State Appraiser Regulatory 

Agency from a task or tasks as provided 

in § 1102.605(a)(3). The notice must 

contain the ASC’s final report. 

(2) The Secretary must publish the 

notice in the Federal Register and must 

provide notice to the State Appraiser 

Regulatory Agency by sending a copy to 

the State Appraiser Regulatory Agency’s 

last known email or mailing address. 

Service is complete upon sending. 

(b) State Appraiser Regulatory 

Agency’s response. (1) Within 20 days 

after publication of the notice in the 

Federal Register, the State Appraiser 

Regulatory Agency may submit a 

response or a notice not to contest to the 

Secretary. 

(2) If a State Appraiser Regulatory 

Agency submits a notice not to contest, 

the ASC must issue the final order 

within 80 days after publication of the 

notice in the Federal Register as set 

forth in paragraph (f) of this section. 

(3) If a State Appraiser Regulatory 

Agency does not submit a response or 

a notice not to contest within 20 days 

after publication of the notice in the 

Federal Register, the ASC may consider 

the facts presented in the notice to be 

true. The ASC must then issue the final 

order within 80 days after publication of 

the notice in the Federal Register as set 

forth in paragraph (f) of this section. 

(c) Briefs, memoranda, and 

statements. After (or 

contemporaneously with) the State 

Appraiser Regulatory Agency’s filing of 

its response, but in no event more than 

40 days after publication of the notice 

in the Federal Register, the State 

Appraiser Regulatory Agency may file 

with the Secretary a written brief, 

memorandum, or other statement 

providing factual data and policy and 

legal arguments regarding the matters 

set out in the notice. 

(d) Oral presentations to the ASC. 

After (or contemporaneously with) the 

State Appraiser Regulatory Agency’s 

filing of its response, but in no event 

more than 40 days after publication of 

the notice in the Federal Register, a 

State Appraiser Regulatory Agency may 

also request to make an oral 

presentation to the ASC. If a State 

Appraiser Regulatory Agency files a 

request for an oral presentation, the ASC 

must hear the matter within 20 days 

after the date the ASC received the 

request for an oral presentation. An oral 

presentation is an opportunity for the 

State Appraiser Regulatory Agency to 

offer, emphasize, and clarify the facts, 

policies, and laws concerning the 

matters set forth in the notice. The State 

Appraiser Regulatory Agency will make 

its oral presentation to the ASC on the 

date and time designated by the ASC. 

The ASC may ask questions relating to 

the contents of the notice, the response, 

the oral presentation, or any written 

briefs, memoranda, or statements 

submitted. 

(e) Conduct of suspension 

proceedings—(1) Written submissions. 

All aspects of suspension proceedings 

will be conducted by written 

submissions, except for oral 

presentations allowed under paragraph 

(d) of this section. 

(2) Rules of evidence. Except as is 

otherwise set forth in this section, 

relevant material and reliable evidence 

that is not unduly repetitive will be 

admissible to the fullest extent 

authorized by the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

other applicable laws. 

(3) Extensions of time. The ASC may, 

on its own initiative or for good cause 

shown, issue a waiver extending any 

time limit in connection with a 

suspension proceeding under this 

section. 

(f) Decision of the ASC. Within 80 

days after publication of the notice in 

the Federal Register, or, in the case of 

the ASC’s receipt of a timely request for 

an oral presentation within 100 days 

after publication of the notice in the 

Federal Register, the ASC must make a 

final decision on the matter by issuing 

a final order. The final order will be 

final and effective upon signature of the 

ASC Chairperson or their designee. The 

Secretary must promptly disseminate 

the final order to the State Appraiser 

Regulatory Agency and publish the final 

order in the Federal Register. 

(g) Documents and exhibits. Unless 

otherwise provided by law, the 

Secretary must place all documents, 

papers, and exhibits submitted in 

connection with the suspension 

proceeding in the proceeding’s file and 

make them available for public 

inspection, except those that may be 

withheld from disclosure under 

applicable law. 

(h) Opportunity for informal 

settlement. The State Appraiser 

Regulatory Agency may submit written 

offers or proposals for settlement of the 

proceeding to the Secretary at any time 

for consideration by the ASC. This 

paragraph (h) shall not preclude 

settlement of any suspension 

proceeding by the filing of a notice not 

to contest as provided in paragraph 

(b)(1) of this section. 

§ 1102.607 Procedures governing nonrecognition proceedings. 

To impose non-recognition against a 

State Appraiser Regulatory Agency, the 

ASC must adhere to the procedures 

governing a non-recognition proceeding, 

as set forth in subpart B of this part. 

By the Appraisal Subcommittee. 

Dated: November 21, 2024. 

Zixta Martinez, 

Chairperson. 

[FR Doc. 2024–27698 Filed 12–5–24; 8:45 am] 

BILLING CODE 6700–01–P 


lotter on DSK11XQN23PROD with PROPOSALS1