Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19521 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 34 

[Docket No. OCC–2014–0002] 

RIN 1557–AD64 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 208 and 225 

[Docket No. R–1486] 

RIN 7100–AE15 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 323 and 390 

RIN 3064–AE10 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

[Docket No. CFPB 2014–0006] 

RIN 3170–AA44 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1222 

RIN 2590–AA61 

Minimum Requirements for Appraisal 

Management Companies 

AGENCY: Office of the Comptroller of the 

Currency, Treasury (OCC); Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); National 

Credit Union Administration (NCUA); 

Bureau of Consumer Financial 

Protection (Bureau); and Federal 

Housing Finance Agency (FHFA). 

ACTION: Joint notice of proposed 

rulemaking. 

SUMMARY: The OCC, Board, FDIC, 

NCUA, Bureau, and FHFA (collectively, 

the Agencies) are jointly proposing a 

rule to implement the minimum 

requirements in the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (the Dodd-Frank Act or Act) to be 

applied by States in the registration and 

supervision of appraisal management 

companies (AMCs). The proposed rule 

also implements the requirement in the 

Dodd-Frank Act for States to report to 

the Appraisal Subcommittee of the 

Federal Financial Institutions 

Examination Council (FFIEC) the 

information required by the Appraisal 

Subcommittee (ASC) to administer the 

new national registry of appraisal 

management companies (AMC National 

Registry or Registry). In conjunction 

with this implementation, the FDIC is 

proposing to integrate its appraisal 

regulations for State nonmember banks 

and State savings associations. 

DATES: Comments must be received on 

or before June 9, 2014. 

ADDRESSES: Interested parties are 

encouraged to submit written comments 

jointly to all of the Agencies. 

Commenters are encouraged to use the 

title ‘‘Minimum Requirements for 

Appraisal Management Companies’’ to 

facilitate the organization and 

distribution of comments among the 

Agencies. Interested parties are invited 

to submit written comments to: 

OCC: Because paper mail in the 

Washington, DC area and at the OCC is 

subject to delay, commenters are 

encouraged to submit comments by the 

Federal eRulemaking Portal or email, if 

possible. Please use the title ‘‘Minimum 

Requirements for Appraisal 

Management Companies’’ to facilitate 

the organization and distribution of the 

comments. You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal— 

‘‘regulations.gov’’: Go to http://

www.regulations.gov. Enter ‘‘Docket ID 

OCC–2014–0002’’ in the Search Box and 

click ‘‘Search’’. Results can be filtered 

using the filtering tools on the left side 

of the screen. Click on ‘‘Comment Now’’ 

to submit public comments. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for submitting 

public comments. 

• Email: regs.comments@

occ.treas.gov. 

• Mail: Legislative and Regulatory 

Activities Division, Office of the 

Comptroller of the Currency, 400 7th 

Street SW., Suite 3E–218, Mail Stop 

9W–11, Washington, DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW., Suite 3E–218, Mail Stop 

9W–11, Washington, DC 20219. 

• Fax: (571) 465–4326. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–2014–0002’’ in your comment. 

In general, the OCC will enter all 

comments received into the docket and 

publish those comments on the 

Regulations.gov Web site without 

change, including any business or 

personal information that you provide 

such as name and address information, 

email addresses, or phone numbers. 

Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

rulemaking action by any of the 

following methods: 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov. Enter 

‘‘Docket ID OCC–2014–0002’’ in the 

Search box and click ‘‘Search’’. 

Comments can be filtered by Agency 

using the filtering tools on the left side 

of the screen. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for viewing 

public comments, viewing other 

supporting and related materials, and 

viewing the docket after the close of the 

comment period. 

• Viewing Comments Personally: You 

may personally inspect and photocopy 

comments at the OCC, 400 7th Street 

SW., Washington, DC. For security 

reasons, the OCC requires that visitors 

make an appointment to inspect 

comments. You may do so by calling 

(202) 649–6700. Upon arrival, visitors 

will be required to present valid 

government-issued photo identification 

and to submit to security screening in 

order to inspect and photocopy 

comments. 

• Docket: You may also view or 

request available background 

documents and project summaries using 

the methods described above. 

Board: Follow the instructions for 

submitting comments at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: regs.comments@

federalreserve.gov. Include the docket 

number in the subject line of the 

message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Address to Robert deV. 

Frierson, Secretary, Board of Governors 

of the Federal Reserve System, 20th 

Street and Constitution Avenue NW., 

Washington, DC 20551. All public 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

19522 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

comments will be made available on the 

Board’s Web site at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets 

NW.) between 9:00 a.m. and 5:00 p.m. 

on weekdays. 

FDIC: You may submit comments by 

any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web site: http://

www.FDIC.gov/regulations/laws/

federal/propose.html. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments/Legal 

ESS, Federal Deposit Insurance 

Corporation, 550 17th Street NW., 

Washington, DC 20429. 

• Hand Delivered/Courier: The guard 

station at the rear of the 550 17th Street 

Building (located on F Street), on 

business days between 7:00 a.m. and 

5:00 p.m. 

• Email: comments@FDIC.gov. 

Comments submitted must include 

‘‘FDIC’’ and ‘‘RIN 3064–AE10.’’ 

Comments received will be posted 

without change to http://www.FDIC.gov/ 

regulations/laws/federal/propose.html, 

including any personal information 

provided. 

NCUA: You may submit comments, 

identified by RIN 3133–AE22 by any of 

the following methods (Please send 

comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web site: http://

www.ncua.gov/Legal/Regs/Pages/

PropRegs.aspx. Follow the instructions 

for submitting comments. 

• Email: Address to regcomments@

ncua.gov. Include ‘‘[Your name] 

Comments on Minimum Requirements 

for Appraisal Management Companies’’ 

in the email subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for email. 

• Mail: Address to Gerard Poliquin, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier in Lieu of 

Mail: Same as mail address. 

You can view all public comments on 

NCUA’s Web site at http://

www.ncua.gov/Legal/Regs/Pages/

PropRegs.aspx as submitted, except for 

those we cannot post for technical 

reasons. NCUA will not edit or remove 

any identifying or contact information 

from the public comments submitted. 

You may inspect paper copies of 

comments in NCUA’s law library at 

1775 Duke Street, Alexandria, Virginia 

22314, by appointment weekdays 

between 9:00 a.m. and 3:00 p.m. To 

make an appointment, call (703) 518– 

6546 or send an email to OGCMail@

ncua.gov. 

Bureau: You may submit comments, 

identified by Docket No. CFPB–2014– 

0006 or RIN 3170–AA44, by any of the 

following methods: 

• Electronic: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552. 

• Hand Delivery/Courier in Lieu of 

Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http://

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FHFA: You may submit your 

comments, identified by regulatory 

information number (RIN) 2590–AA61, 

by any of the following methods: 

• Email: Comments to Alfred M. 

Pollard, General Counsel, may be sent 

by email to RegComments@fhfa.gov. 

Please include ‘‘RIN 2590–AA61’’ in the 

subject line of the message. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. If 

you submit your comment to the 

Federal eRulemaking Portal, please also 

send it by email to FHFA at 

RegComments@fhfa.gov to ensure 

timely receipt by FHFA. Please include 

‘‘RIN 2590–AA61’’ in the subject line of 

the message. 

• Hand Delivered/Courier: The hand 

delivery address is: Alfred M. Pollard, 

General Counsel, Attention: Comments/ 

RIN 2590–AA61, Federal Housing 

Finance Agency, Eighth Floor, 400 

Seventh Street SW., Washington, DC 

20024. Deliver the package to the 

Seventh Street entrance Guard Desk, 

First Floor, on business days between 9 

a.m. to 5 p.m. 

• U.S. Mail, United Parcel Service, 

Federal Express, or Other Mail Service: 

The mailing address for comments is: 

Alfred M. Pollard, General Counsel, 

Attention: Comments/RIN 2590–AA61, 

Federal Housing Finance Agency, 

Eighth Floor, 400 Seventh Street SW., 

Washington, DC 20024. 

Copies of all comments will be posted 

without change, including any personal 

information you provide, such as your 

name, address (mailing and email), and 

phone number, on the FHFA Web site 

at http://www.fhfa.gov. In addition, 

copies of all comments received will be 

available for examination by the public 

on business days between the hours of 

10 a.m. and 3 p.m., Eastern Time, at the 

Federal Housing Finance Agency, 

Eighth Floor, 400 Seventh Street SW., 

Washington, DC 20024. To make an 

appointment to inspect comments, 

please call the Office of General Counsel 

at (202) 649–3804. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Robert L. Parson, Appraisal Policy 

Specialist, (202) 649–6423, G. Kevin 

Lawton, Appraiser (Real Estate 

Specialist), (202) 649–7152, Mitchell E. 

Plave, Special Counsel, or Charlotte M. 

Bahin, Senior Counsel, Legislative & 

Regulatory Activities Division, (202) 

649–5490, for persons who are deaf or 

hard of hearing, TTY, (202) 649–5597, 

or Christopher Manthey, Special 

Counsel, Bank Activities and Structure 

Division, (202) 649–5500. 

Board: Carmen Holly, Supervisory 

Financial Analyst, Division of Banking 

Supervision and Regulation, at (202) 

973–6122, Walter McEwen, Senior 

Counsel, Legal Division, at (202) 452– 

3321, or Will C. Giles, Counsel, Legal 

Division, at (202) 452–3351, Board of 

Governors of the Federal Reserve 

System, Washington, DC 20551. 

FDIC: Beverlea S. Gardner, Senior 

Examination Specialist, Division of Risk 

Management and Supervision, at (202) 

898–3640, Sandra S. Barker, Senior 

Policy Analyst, Division of Consumer 

Protection, at (202) 898–3915, Mark 

Mellon, Counsel, Legal Division, at 

(202) 898–3884, Kimberly Stock, 

Counsel, Legal Division, at (202) 898– 

3815, or Benjamin K. Gibbs, Senior 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19523 

1Public Law 111–203, 124 Stat. 1376. 

2Public Law 101–73, 103 Stat. 183; 12 U.S.C. 

3353. 

3The term ‘‘appraisal management company’’ is 

defined in more detail in section 1121 of Title XI 

of FIRREA, 12 U.S.C. 3350(11), and in proposed 

§ 34.211(c). 

4 12 U.S.C. 3346. 

5Hereafter, section references are to Title XI of 

FIRREA unless otherwise noted. 

6 12 U.S.C. 3332(a)(6); 3338(a)(3); 3353(e). 

7Under FIRREA, a Federally related transaction 

is a real estate related financial transaction that 

involves an institution regulated by the OCC, Board, 

FDIC, or NCUA and that requires the services of an 

appraiser under the interagency appraisal rules. 

OCC: 12 CFR part 34, subpart C and 12 CFR part 

164; Board: 12 CFR part 208, subpart E and 12 CFR 

part 225, subpart G; FDIC: 12 CFR part 323; and 

NCUA: 12 CFR part 722. 

8See Board: 12 CFR 226.42; Bureau: 12 CFR 

1026.42. 

9 12 U.S.C. 3353(b). 

10 12 U.S.C. 3353(f)(1). Under section 1124, this 

restriction will not apply to AMCs that are 

subsidiaries owned and controlled by an insured 

depository institution or an insured credit union, 

and regulated by a Federal financial institutions 

regulatory agency. Such AMCs are subject to all the 

requirements of section 1124, with the exception of 

the requirement to register with a State. 

11 12 U.S.C. 3353(a). 

12The OTS was abolished on October 19, 2011. 

Regional Attorney, at (678) 916–2458, 

Federal Deposit Insurance Corporation, 

550 17th Street NW., Washington, DC 

20429. 

NCUA: John Brolin or Pamela Yu, 

Staff Attorneys, Office of General 

Counsel, at (703) 518–6540, or Vincent 

Vieten, Program Officer, Office of 

Examination and Insurance, at (703) 

518–6360, or 1775 Duke Street, 

Alexandria, Virginia 22314. 

Bureau: Owen Bonheimer, Counsel, 

Office of Regulations, David Friend, 

Counsel, Office of Regulations, or 

Connor Raso, Attorney-Advisor, Legal 

Division, 1700 G Street NW., 

Washington, DC 20552, at (202) 435– 

7000. 

FHFA: Robert Witt, Senior Policy 

Analyst, Office of Housing and 

Regulatory Policy, (202) 649–3128, or 

Ming-Yuen Meyer-Fong, Assistant 

General Counsel, Office of General 

Counsel, (202) 649–3078, Federal 

Housing Finance Agency, 400 Seventh 

Street SW., Washington, DC 20024. 

SUPPLEMENTARY INFORMATION: 

I. Background 

AMC Minimum Requirements 

On July 21, 2010, the Dodd-Frank 

Act 1 was signed into law. Section 1473 

of the Dodd-Frank Act added a new 

section 1124 to Title XI of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act of 1989 (FIRREA) 2 and 

established minimum requirements to 

be applied by States in the registration 

and supervision of AMCs. An AMC is 

an entity that serves as an intermediary 

for, and provides certain services to, 

appraisers and lenders.3 These 

minimum requirements apply to States 

that have elected to establish, pursuant 

to section 1117 of FIRREA,4 an 

appraiser certifying and licensing 

agency with authority to register and 

supervise AMCs (participating States). 

Section 1473 of the Dodd-Frank Act 5

also created the AMC National Registry, 

which will be administered by the ASC, 

and requires participating States to 

report AMC registration information to 

the ASC to support the Registry.6 The 

AMC National Registry will include 

AMCs that are either: (1) Registered 

with, and subject to supervision of, a 

State appraiser certifying and licensing 

agency; or (2) subsidiaries owned and 

controlled by an insured depository 

institution or an insured credit union 

and regulated by a Federal financial 

institutions regulatory agency. 

Under section 1124, participating 

States must require that AMCs: (1) 

Register with, and be subject to, 

supervision by the State appraiser 

certifying and licensing agency in the 

State or States in which such company 

operates; (2) verify that only Statecertified or State-licensed appraisers are 

used for Federally related transactions; 7

(3) require that appraisals comply with 

the Uniform Standards of Professional 

Appraisal Practice (USPAP); and (4) 

require that appraisals are conducted in 

accordance with the statutory appraisal 

independence standards under the 

Truth in Lending Act (TILA) (15 U.S.C. 

1639e) and implementing regulations.8

An AMC that is a subsidiary owned and 

controlled by an insured depository 

institution or an insured credit union, 

and that is regulated by a Federal 

financial institutions regulatory agency 

is subject to all of the minimum 

requirements, except the requirement to 

register with a State. The minimum 

requirements will apply to any AMC 

that provides appraisal management 

services, as defined in the proposed 

regulation, and meets the statutory size 

threshold, which is that the AMC 

oversees an appraiser panel of more 

than 15 State-certified or State-licensed 

appraisers in a State or of 25 or more 

appraisers nationally in a given year. 

States may establish requirements for 

AMC registration and supervision that 

are in addition to these minimum 

requirements.9

Under section 1124, beginning 36 

months from the time the Agencies 

issue the final AMC rule, an AMC may 

not provide services for a Federally 

related transaction in a State unless the 

AMC is registered with the State or is 

subject to oversight by a Federal 

financial institutions regulatory agency. 

This effectively allows each State up to 

36 months to set up registration and 

supervision systems that meet the 

requirements of the final rule. The ASC, 

with the approval of the FFIEC, may 

extend the 36-month deadline for an 

additional 12 months if the ASC makes 

a finding that the State has made 

substantial progress toward 

implementation of a system that meets 

the criteria in the final rule. 

Section 1124 does not compel a State 

to establish an AMC registration and 

supervision program, nor is there a 

penalty imposed on a State that does not 

establish a regulatory structure for 

AMCs within 36 months of issuance of 

the final AMC rule. However, in such a 

State, unless and until it establishes 

such a regulatory structure, AMCs are 

barred by section 1124 from providing 

appraisal management services for 

Federally related transactions.10

Under section 1124 of Title XI, the 

Agencies must establish, by rule, 

minimum requirements to be imposed 

by a participating State appraiser 

certifying and licensing agency on 

AMCs doing business in the State.11 The 

statute also directs the Agencies to issue 

regulations that identify certain 

activities of AMCs that participating 

State appraiser certifying and licensing 

agencies should report to the ASC. This 

proposed rule implements these 

statutory requirements. 

Consolidation of FDIC and OTS Rules 

on Appraisals 

Title III of the Dodd-Frank Act 

transferred the powers, duties, and 

functions formerly performed by the 

Office of Thrift Supervision (OTS), the 

Federal entity formerly responsible for 

the supervision of federally insured 

savings associations and their holding 

companies, to the FDIC for State savings 

associations and authorized the FDIC to 

consolidate OTS and FDIC rules.12 This 

proposed rule implements this authority 

by rescinding the OTS regulatory 

provisions on appraisals pertaining to 

State savings associations as such 

associations are covered by the FDIC’s 

existing appraisal rules. 

II. The Proposed Rule 

The Agencies are issuing this 

proposal to implement the minimum 

requirements for registration and 

supervision of AMCs in the Dodd-Frank 

Act, Title XIV, Subtitle F (Appraisal 

Activities). As required by the DoddFrank Act, this proposal was developed 

jointly by the OCC, the Board, the FDIC, 

the Bureau, the FHFA, and the NCUA. 

The proposed rule would: (1) Establish 

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19524 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

13For ease of reference, the preamble refers to 

section numbers in the proposed rule text for the 

OCC. 

14The proposed rule incorporates the definition 

of ‘‘person’’ from Regulation Z, which defines a 

person as ‘‘a natural person or an organization, 

including a corporation, partnership, 

proprietorship, association, cooperative, estate, 

trust, or government unit.’’ 12 CFR 1026.2(22). 

15This understanding is based on the supervisory 

experience of the Agencies as well as outreach to 

a major trade association for AMCs and a large 

AMC, which confirmed that, under the current 

business model, AMCs do not generally provide 

services in connection with securitizations of 

commercial mortgages. 

16 12 U.S.C. 3350(11). 

17The Agencies conducted outreach in 2013 with 

State appraiser certifying and licensing agencies 

the minimum requirements in section 

1473 of the Dodd-Frank Act for 

registration of AMCs; (2) establish the 

minimum requirements for AMCs that 

register with the State under section 

1473 of the Dodd-Frank Act; (3) require 

Federally regulated AMCs to meet the 

minimum requirements of section 1473 

(other than registering with the State); 

and (4) require the reporting of certain 

AMC information to the ASC. The 

proposed rule is being published in the 

CFR separately by the OCC, the Board, 

the FDIC, and the FHFA. No substantive 

difference between the rules is 

intended. The proposed rule would also 

integrate FDIC appraisal regulations for 

State nonmember banks and State 

savings associations. 

Key Definitions 

Appraisal management company. 

Proposed § 34.211(c) 13 defines an AMC 

as a person 14 that: (1) provides 

appraisal management services to 

creditors or secondary mortgage market 

participants; (2) provides such services 

in connection with valuing a 

consumer’s principal dwelling as 

security for a consumer credit 

transaction (including consumer credit 

transactions incorporated into 

securitizations); and (3) within a given 

year, oversees an appraiser panel of 

more than 15 State-certified or Statelicensed appraisers in a State or 25 or 

more State-certified or State-licensed 

appraisers in two or more States. The 

proposed definition cross-references 

proposed § 34.212 for the rules on how 

to calculate the numeric threshold for 

the appraiser panel. 

Securitization within the definition of 

appraisal management company. The 

proposed definition of AMC applies to 

appraisal management services 

provided in connection with residential 

mortgage transactions and 

securitizations involving residential 

mortgages. The proposed rule does not 

extend to appraisal management 

services provided in connection with 

commercial real estate transactions or 

securitizations involving commercial 

real estate mortgages. In drafting the 

definition of AMC for the proposal, the 

Agencies considered whether the 

statutory definition of AMC in section 

1121 should be construed to encompass 

not only appraisal management services 

provided for securitizations of 

residential mortgages, but also appraisal 

services in connection with 

securitizations of commercial 

mortgages. 

The Agencies’ reading of the statute— 

that it only extends to residential 

mortgage transactions and 

securitizations involving residential 

mortgages—is consistent with the text of 

section 1124 and of other relevant 

portions of the Dodd-Frank Act taken as 

a whole. Non-residential or commercial 

mortgages are not mentioned in any 

AMC provisions in section 1473 (or 

elsewhere in Title XIV of the DoddFrank Act). The lack of a reference to 

commercial mortgage lending in the 

relevant Dodd-Frank Act provisions 

suggests that AMCs were not intended 

to be covered by the AMC minimum 

requirements when they are providing 

appraisal management services for 

underwriters or other principals of 

commercial mortgage securitizations. 

Moreover, the Agencies understand that 

individual appraisers, as opposed to 

AMCs, are more typically retained to 

provide an appraisal of properties that 

will be included in securitizations of 

commercial mortgage loans because of 

the size and complexity of those 

properties.15

‘‘External third party’’ within the 

definition of appraisal management 

company. Section 1121 defines an AMC 

as any ‘‘external third party’’ authorized 

to take certain actions by a creditor of 

a consumer credit transaction secured 

by a consumer’s principal dwelling or 

by an underwriter of or other principal 

in the secondary mortgage markets.16

Consistent with the statutory definition, 

the proposal would define the term 

AMC to exclude a department or 

division of an entity when such 

department or division provides 

appraisal management services only to 

that entity. These departments or 

divisions are not ‘‘external third 

parties’’ as required by the statute. An 

AMC that is an affiliate (rather than a 

department or division) of a creditor or 

secondary market principal, however, 

would be treated as an AMC under the 

proposed rule, even if the AMC 

provides appraisal management services 

only to the entity with which it is 

affiliated, because the affiliate is a 

separate legal entity. 

The Agencies believe that this 

interpretation is consistent with the 

plain meaning of ‘‘external’’ and ‘‘third 

party,’’ as well as with section 1124(c), 

which by its terms contemplates that the 

requirements of section 1124 would 

apply to subsidiaries of financial 

institutions. In the Agencies’ view, this 

interpretation is also consistent with 

section 1124 as a whole, which is 

directed at regulating parties that 

provide appraisal management services 

on behalf of creditors and secondary 

market principals, but does not regulate 

creditors or secondary market principals 

directly. 

Question 1. The Agencies request 

comment on all aspects of the proposed 

definition of AMC. 

Appraisal management services. 

Proposed § 34.211(d) defines ‘‘appraisal 

management services’’ to mean one or 

more of the following: (1) recruiting, 

selecting, and retaining appraisers; (2) 

contracting with State-certified or Statelicensed appraisers to perform appraisal 

assignments; (3) managing the process 

of having an appraisal performed, 

including providing administrative 

duties such as receiving appraisal orders 

and appraisal reports, submitting 

completed appraisal reports to creditors 

and secondary mortgage market 

participants, collecting fees from 

creditors and secondary mortgage 

market participants for services 

provided, and paying appraisers for 

services performed; or (4) reviewing and 

verifying the work of appraisers. This 

definition reflects the appraisal 

management services outlined in the 

definition of AMC in section 1121. 

Appraiser panel. The definition of 

AMC in section 1473 of the Dodd-Frank 

Act provides that an entity will be 

treated as an AMC for purposes of State 

registration if it has an ‘‘appraiser 

network or panel’’ of more than 15 

State-certified or State-licensed 

appraisers in a State or 25 or more 

nationally within a given year. Section 

1473 does not specify whether a 

‘‘network or panel’’ consists of 

employees of an AMC or independent 

contractors retained by the AMC (or 

both). To help address this issue, the 

Agencies conducted outreach with 

associations that represent AMCs and 

appraisers to gather information about 

the AMC business model. The Agencies 

also conducted outreach with State 

appraiser certifying and licensing 

agencies to gather information on the 

experience of States that have adopted 

AMC laws that define ‘‘appraiser 

panel.’’ 17

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19525 

through the Association of Appraisal Regulatory 

Officials (AARO), see http://www.aaro.net/. 

18See, e.g., N.C. Gen. Stat. section 93E–2–2 

(defining an appraiser panel as a network or panel 

of appraisers who are independent contractors to 

the AMC); Vernon’s Tex. Code Ann. Occupations 

Code section 1104.003(b)(3) (same); Louisiana La. 

Rev. Stat. Ann section 37:3415.2(a) (same); see also 

Ohio (draft code) (same). 

19See, e.g., Cal. Bus. & Prof. Code section 11302 

(defining AMC to include both independent 

contractors and employees); Ark. Code Ann. section 

17–14–402(2) (same); Ky. Rev, Stat. section 

324A.150(2)(same). 

20See, e.g., IRS Publication 1779, ‘‘Independent 

Contractor or Employee,’’ available at http://

www.irs.gov/pub/irs-pdf/p1779.pdf; IRS Publication 

15–A, ‘‘Employer’s Supplemental Tax Guide,’’ at p. 

7 et seq. (discussing factors for distinguishing 

employees from independent contractors), available 

at http://www.irs.gov/pub/irs-pdf/p15a.pdf. 

21 12 CFR 1008.23 (‘‘Independent contractor 

means an individual who performs his or her duties 

other than at the direction of and subject to the 

supervision and instruction of an individual . . .’’). 

The term ‘‘independent contractor’’ is distinguished 

from ‘‘employee,’’ which is defined as an individual 

(1) whose manner and means of performance of 

work are subject to the right of control of, or are 

controlled by, a person, and (2) whose 

compensation for Federal income tax purposes is 

reported, or required to be reported, on a W–2 form 

issued by the controlling person.). 

22The S.A.F.E. Act was enacted as part of the 

Housing and Economic Recovery Act of 2008, 

Public Law 110–289, Division A, Title V, sections 

1501–1517, 122 Stat. 2654, 2810–2824 (July 30, 

2008), codified at 12 U.S.C. 5101–5116. 

23See, e.g., U.S. House of Reps., Comm. on Fin. 

Servs., Report on H.R. 1728, Mortgage Reform and 

Anti-Predatory Lending Act, No. 111–94, 75 (May 

4, 2009) (noting that the AMC statutory provision 

would authorize the ASC to oversee companies that 

retain or contract with appraisers and manage the 

process of having an appraisal performed (appraisal 

management companies)). 

24The Agencies note that participating States 

would have authority, under their general power to 

regulate commerce within their borders, and not in 

implementation of this rule, to regulate appraisal 

firms. 

Based on this outreach, the Agencies 

understand that a majority of States that 

have adopted AMC laws define 

‘‘appraiser panel’’ as being comprised of 

independent contractors.18 A minority 

of States use a broader definition for 

‘‘appraiser panel’’ that encompasses a 

combination of independent contractors 

and employees.19 The majority 

approach is consistent with the model 

AMC code offered by a trade association 

for appraisers and the minority 

approach is consistent with a model 

code offered by a trade association for 

AMCs. 

Proposed § 34.211(e) defines an 

appraiser network or panel as a network 

of State-licensed or State-certified 

appraisers who are independent 

contractors to an AMC. This definition 

reflects the approach taken by the 

majority of States that have adopted 

AMC registration laws or have proposed 

such laws, as discussed above. The 

proposed definition of appraiser panel 

also reflects the Agencies’ 

understanding, based on the outreach, 

that AMCs typically engage appraisers 

as independent contractors under the 

current AMC business model, rather 

than having employees perform 

appraisals. Proposed § 34.211(e) also 

reflects the definition of appraisal 

management company in section 1121, 

which outlines typical tasks carried out 

by AMCs, such as contracting with 

State-licensed or State-certified 

appraisers. This definition of AMC and 

its description of appraisal management 

services do not include performing 

appraisals. 

Although the Agencies believe that 

defining an ‘‘appraiser network or 

panel’’ as including independent 

contractors is consistent with the DoddFrank Act and the current business 

model of AMCs, the Agencies, in 

conjunction with the ASC, will monitor 

AMCs to assess whether they are hiring 

appraisers as part-time employees to 

avoid State registration requirements. 

Outreach with State officials did not 

indicate this is currently occurring or at 

significant risk of occurring. 

Question 2. The Agencies request 

comment on the proposed definition of 

‘‘appraiser network or panel’’ and on the 

alternative of defining this term to 

include employees as well as 

independent contractors. The Agencies 

also request comment on whether the 

term ‘‘independent contractor’’ should 

be defined, and if so why and how, 

including whether it should be defined 

based upon Federal law (e.g., using the 

standards issued by the Internal 

Revenue Service 20 or standards adopted 

in other Federal regulations, such as 

those issued under the Secure and Fair 

Enforcement for Mortgage Licensing 

Act 21 (S.A.F.E. Act)),22 or left to State 

law (so as to be consistent with existing 

AMC laws). 

Appraisal firms. An appraisal firm is 

a firm that is engaged to perform 

appraisals. Section 1473 of the DoddFrank Act appears to distinguish AMCs 

that contract with others to perform 

appraisals from appraisal firms that are 

comprised of groups of appraisers that 

perform appraisals as part of a single 

firm or partnership. For the following 

reasons, the Agencies believe that 

appraisal firms should not be treated as 

AMCs under section 1473. 

One basic reason to distinguish 

between AMCs and appraisal firms is 

that the business models of AMCs and 

appraisal firms are different. AMCs 

provide appraisal management services 

to third parties, including retaining 

appraisers to perform appraisals, but 

AMCs do not perform appraisals. This is 

a core characteristic of an AMC that 

distinguishes its model from appraisal 

firms, given that appraisal firms perform 

appraisals using one of the firm’s 

employees or partners.23

The text of section 1473 also reflects 

these difference in the business models 

of AMCs and appraisal firms. Section 

1473 describes the duties of AMCs as 

including ‘‘contracting with Statecertified or State-licensed appraisers to 

perform appraisal assignments.’’ While 

Congress could have explicitly included 

‘‘performing appraisal assignments’’ in 

this list of business lines, it did not. 

Another basis for excluding appraisal 

firms from State AMC registration is that 

section 1124 uses the term ‘‘Appraisal 

Management Company,’’ which, again, 

is understood generally to refer to an 

entity that provides appraisal 

management services by retaining 

appraisers as independent contractors 

and not by performing appraisals. 

Given this statutory language, the 

proposal differentiates between entities 

that contract with appraisers to perform 

appraisals (such entities being AMCs), 

versus those whose employees directly 

perform appraisals (those entities being 

appraisal firms). For this reason, and for 

other reasons discussed above, the 

Agencies have proposed that business 

entities that perform appraisals should 

not be treated as AMCs for purposes of 

implementing the Dodd-Frank Act’s 

State registration and supervision 

requirements, with the exception of a 

hybrid firm, as discussed below. Thus, 

the proposed regulation does not 

authorize participating States to require 

appraisal firms to register as AMCs or to 

require that appraisal firms be subject to 

supervision under the AMC registration 

and supervision programs implemented 

by the proposed regulation (again, 

however, with the exception of a hybrid 

firm).24

Hybrid firms or entities. The Agencies 

have considered the possibility that 

there are, or may be in the future, 

‘‘hybrid’’ entities, meaning entities that 

both hire appraisers as employees to 

perform appraisals, and engage 

independent contractors to perform 

appraisals. In this situation, the entity 

could be considered both an AMC and 

an appraisal firm. In such a case, the 

entity should be treated as an AMC for 

purposes of State registration if it meets 

the numerical test (of overseeing more 

than 15 State-certified or State-licensed 

appraisers in a State or 25 or more Statecertified or State-licensed appraisers in 

two or more States within a given year). 

The numerical calculation for hybrid 

entities should only include appraisers 

engaged as independent contractors. 

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19526 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

25See 12 U.S.C. 3353(a)(3) and (4); contra 12 

U.S.C. 3353(a)(2) and (f)(1). 

26 12 U.S.C. 3353(a)(4). 

27See 15 U.S.C. 1639e(a) (defining scope); 12 CFR 

1026.42(b)(1)–(2) (implementing regulations 

defining scope). 

28The term ‘‘Federal financial institutions 

regulatory agencies’’ means the Board, the FDIC, the 

OCC, the former OTS, and the NCUA. 12 U.S.C. 

3350(6). Title III of the Dodd-Frank Act provides 

that the OCC is now the Federal financial 

institutions regulatory agency for Federal savings 

associations. Title III of the Dodd-Frank Act also 

provides that the FDIC is the Federal financial 

institutions regulatory agency for state savings 

associations. Finally, the Dodd-Frank Act provides 

that the Board is responsible for regulation of 

savings and loan holding companies. 

29 12 U.S.C. 3353(c). 

30 12 CFR Part 712. 

31 12 U.S.C. 3353(c). 

32See 75 FR 44656, 44659 (July 28, 2010) 

(Applying similar reasoning to the licensing of 

mortgage loan originators who were employees of 

CUSOs under the Secure and Fair Enforcement for 

Mortgage Licensing Act of 2008). 

Question 3. The Agencies request 

comment on the distinction the 

Agencies have drawn between 

employees and independent contractors 

as a basis for exclusion of appraisal 

firms from the definition of an AMC. 

Covered transaction. The proposed 

rule applies to AMCs that provide 

appraisal management services relating 

to a ‘‘covered transaction.’’ Proposed 

§ 34.211(h) defines a covered 

transaction as any consumer credit 

transaction secured by the consumer’s 

principal dwelling. The proposed 

definition does not limit the definition 

of ‘‘covered transaction’’ to Federally 

related transactions (generally, credit 

transactions involving a Federally 

regulated depository institution, see 12 

U.S.C. 3350(4)), even though Title XI of 

FIRREA and its implementing 

regulations have historically applied 

only to appraisals for Federally related 

transactions. 

This interpretation is proposed to 

reflect the statutory text of section 

1121(11), which defines the term 

‘‘appraisal management company’’ in 

connection with ‘‘valuing properties 

collateralizing mortgage loans or 

mortgages incorporated into a 

securitization.’’ This interpretation is 

also consistent with the structure and 

text of other parts of section 1124, 

which distinguish between ‘‘appraisals’’ 

generally and appraisal services related 

specifically to Federally related 

transactions.25 Furthermore, the text of 

section 1124(a)(4) indicates that one of 

the chief purposes of the minimum 

requirements for AMCs is to ensure 

compliance with the appraisal 

independence standards established 

under section 129E of TILA.26 Those 

standards apply to AMCs whenever they 

engage in a consumer credit transaction 

secured by a principal dwelling, 

regardless of whether the transaction is 

a Federally related transaction.27

For these reasons, the proposed rule 

would establish minimum requirements 

in participating States for all entities 

that meet the definition of AMC, 

regardless of whether the AMC 

participates in Federally related 

transactions. 

Federally regulated AMCs and 

Federally related transaction 

regulations. Under section 1124(c), an 

AMC that is a subsidiary owned and 

controlled by an insured depository 

institution or an insured credit union 

and that is regulated by a Federal 

financial institutions regulatory 

agency 28 is not required to register with 

a State.29 Proposed § 34.211(j) defines 

such an AMC as a ‘‘Federally regulated 

AMC,’’ meaning an AMC that is owned 

and controlled by an insured depository 

institution, as defined in 12 U.S.C. 1813, 

or an insured credit union, as defined in 

12 U.S.C. 1752, and that is regulated by 

the OCC, Board, NCUA, or the FDIC. 

A Federally regulated AMC must 

follow the minimum requirements that 

are applicable to State-registered AMCs 

and is subject to supervision for 

compliance with these standards by the 

appropriate Federal financial 

institutions regulatory agency. In 

addition, a Federally regulated AMC 

must report to the State or States in 

which it operates the information 

required to be submitted by the State to 

the ASC for inclusion of the AMC on the 

AMC National Registry. 

The NCUA, unlike the other banking 

agencies to this rulemaking, does not 

directly oversee or regulate any 

subsidiaries owned and controlled by 

credit unions, including AMC 

subsidiaries. Rather, the NCUA’s 

regulations permit Federal credit unions 

to invest in or lend only to credit union 

service organizations (CUSOs) that 

conform to specific requirements 

outlined in part 712 of the NCUA’s 

regulations.30 As explained above, the 

Agencies are interpreting section 

1124(c) 31 to apply only to AMC 

subsidiaries owned and controlled by an 

insured depository institution, or an 

insured credit union, and regulated by 

a Federal financial institutions 

regulatory agency. NCUA has not, 

historically, asserted that CUSOs or 

their employees are exempt from 

applicable State registration and 

licensing regimes, and this proposed 

rule would not alter that approach.32

Nor does NCUA directly regulate or 

oversee CUSOs owned by Statechartered credit unions. Accordingly, 

under the proposal, AMC CUSOs, 

whether owned by a State or Federally 

chartered credit union, are not 

considered to be regulated by a Federal 

financial institutions regulatory agency 

at this time and would be required to be 

registered in accordance with applicable 

State requirements. 

Question 4. The agencies request 

comment on whether references to the 

NCUA and insured credit unions should 

be removed from the definition of 

‘Federally regulated AMC’ and other 

parts of the final regulation to clarify 

that AMC CUSOs are subject to State 

registration and supervision. 

Proposed § 34.211(k) defines 

‘‘Federally related transaction 

regulations’’ to mean the regulations 

issued by the OCC, Board, FDIC, and 

NCUA pursuant to sections 1112, 1113, 

and 1114 of FIRREA Title XI, 12 U.S.C. 

3341–3343. These interagency 

regulations established certain safety 

and soundness standards for appraisals 

conducted in connection with lending 

by institutions regulated by the OCC, 

Board, FDIC, or NCUA. The Agencies 

added this definition to implement the 

minimum standard in section 1124(a)(2) 

that requires an AMC to verify that only 

certified or licensed appraisers are used 

for Federally related transactions. 

Secondary mortgage market 

participant. The term ‘‘secondary 

mortgage market participant’’ is used in 

the proposed regulation to implement 

the corresponding reference in the 

statute to ‘‘an underwriter of or other 

principal in the secondary mortgage 

markets.’’ Proposed § 34.211(n) defines 

‘‘secondary mortgage market 

participant’’ to mean a guarantor or 

insurer of mortgage-backed securities, or 

an underwriter or issuer of mortgagebacked securities. The definition 

includes individual investors in a 

mortgage-backed security only if they 

also serve in the capacity of a guarantor, 

insurer, underwriter, or issuer for the 

mortgage-backed security. 

Question 5. The Agencies request 

comment on the proposed definition of 

‘‘secondary mortgage market 

participant.’’ Are the types of entities 

cited in the proposed definition 

appropriately included in this context? 

Should any other types of entities be 

expressly included or excluded from 

this definition, for the sake of clarity? 

Should any other types of entities be 

considered ‘‘an underwriter or other 

principal in the secondary mortgage 

markets’’ for the purpose of the 

definition of AMC in the Dodd-Frank 

Act? 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19527 

33The Agencies recognize that States, in exercise 

of their general powers to license and regulate 

commerce within their borders and not in 

implementation of this rule, may choose to adopt 

registration provisions for AMCs that do not meet 

the size thresholds in the proposed rule. 

34The Agencies believe that section 1124 allows 

the Agencies to establish more specific 

requirements for supervision and registration of 

AMCs that implement the general requirements 

enumerated in section 1124(a). In addition, by 

providing that the regulation shall ‘‘include’’ the 

requirements enumerated in section 1124, it is 

implied that the Agencies have the discretion to 

establish additional supervisory standards for State 

oversight of AMCs beyond the general requirements 

specifically enumerated in section 1124(a). 

35See 12 U.S.C. 3332(a)(1)(B) (requiring the ASC 

to monitor requirements established by the States 

for supervision of AMCs); 12 U.S.C. 3338(a) 

(requiring each participating State to transmit 

reports to the ASC on supervisory activities 

involving AMCs and disciplinary actions taken); 

and 12 U.S.C. 3347(a) (requiring the ASC to monitor 

States to assess whether a State has an effective 

regulatory program). 

36 Interagency Appraisal and Evaluation 

Guidelines, 75 FR 77450, 77458 (December 10, 

2010). 

37See 12 CFR 226.42 (Board); 12 CFR 1026.42 

(Bureau). 

Minimum AMC Requirements and 

Implementation Issues 

Method for assessing the number of 

appraisers on AMC panels. The 

proposed rule provides parameters for 

determining whether, within a given 

year, an AMC 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.33

Under the proposed rule, an appraiser is 

deemed part of the AMC’s appraiser 

panel as of the earliest date the AMC 

accepts the appraiser for consideration 

for future appraisal engagements, or 

contracts with the appraiser to perform 

one or more appraisals on behalf of a 

creditor or secondary mortgage market 

principal, including an affiliate of such 

a creditor or principal. 

An appraiser who is considered to be 

part of the AMC’s appraiser panel is 

deemed to remain on the panel until the 

date on which the AMC sends written 

notice to the appraiser removing the 

appraiser from the appraiser panel, with 

an explanation of its action; receives 

written notice from the appraiser asking 

to be removed from the appraiser panel; 

or receives notice of the death or 

incapacity of the appraiser. If an 

appraiser is removed from an AMC’s 

appraiser panel, but the AMC 

subsequently re-admits the appraiser or 

engages the appraiser at any time during 

the twelve months after the appraiser’s 

removal, the removal will be deemed 

not to have occurred, and the appraiser 

will be deemed to have been part of the 

AMC’s appraiser panel without 

interruption. The Agencies believe that 

these procedural provisions will 

provide clarity to States and prevent 

circumvention of the registration 

requirement. 

Minimum requirements for State 

registration and supervision of AMCs. 

Under the proposed rule, participating 

States must have in place within the 

State appraiser certifying and licensing 

agency a licensing program that has 

authority to: (1) Review and approve or 

deny an AMC’s application for initial 

registration; (2) review and renew or 

refuse to renew an AMC’s registration 

periodically; (3) examine the books and 

records of an AMC operating in the 

State and require the AMC to submit 

reports, information, and documents to 

the State; (4) verify that the appraisers 

on the AMC’s appraiser list, network, 

panel, or roster hold valid State 

certifications or licenses, as applicable; 

(5) conduct investigations of AMCs to 

assess potential violations of applicable 

appraisal-related laws, regulations, or 

orders; (6) discipline, suspend, 

terminate, and refuse to renew the 

registration of an AMC that violates 

applicable appraisal-related laws, 

regulations, or orders; and (7) report an 

AMC’s violation of applicable appraisalrelated laws, regulations, or orders, as 

well as disciplinary and enforcement 

actions and other relevant information 

about an AMC’s operations, to the ASC. 

These proposed authorities and 

mechanisms reflect the Agencies’ 

interpretation of the provisions of 

section 1124(a), including the minimum 

requirement in section 1124(a)(1) that 

AMCs be ‘‘subject to supervision’’ by 

the State agency.34 The Agencies 

interpret section 1124(a) as being 

consistent with the criteria outlined in 

sections 1103, 1109, and 1118(a) of 

FIRREA, as amended by the Dodd-Frank 

Act, which describe the elements of 

State regulation of AMCs that will be 

monitored by the ASC.35 For example, 

the ASC will monitor whether States 

have supervision systems in place that 

would allow a State to process 

complaints against an AMC and conduct 

investigations in connection with those 

complaints. The ASC will also monitor 

whether a State takes appropriate 

enforcement actions against an AMC 

that is found to have violated applicable 

laws and regulations. 

The Agencies believe that the 

proposed rule will provide notice to 

States of the enforcement and 

supervision obligations the States have 

under FIRREA and ensure that State 

appraiser certifying and licensing 

agencies have the required minimum 

structures for registration and 

supervision of AMCs 

Question 6. The Agencies request 

comment on the proposed minimum 

requirements for State registration and 

supervision of AMCs. 

Minimum requirements for Stateregistered AMCs. Under section 1124, 

participating States are required to 

ensure that AMCs that provide appraisal 

management services for a creditor or 

‘‘underwriter of or other principal in the 

secondary mortgage markets’’ related to 

a covered transaction follow certain 

minimum requirements. The proposed 

rule implements these requirements. 

Under the proposed rule, an AMC 

must register with, and be subject to 

supervision by, a State appraiser 

certifying and licensing agency in each 

State in which the AMC operates. 

(Again, however, the requirement to 

register with a State does not apply to 

Federally regulated AMCs; the rules for 

these AMCs are discussed further 

below.) In addition, an AMC must verify 

that only State-certified or Statelicensed appraisers are used when a 

creditor or secondary mortgage market 

participant engages in a transaction that 

requires the services of a State-certified 

or State-licensed appraiser under the 

Federally related transaction 

regulations. An AMC must also have 

processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who has the requisite 

education, expertise, and experience 

necessary to complete competently the 

assignment for the particular market and 

property type. This minimum 

requirement implements the 

requirement of section 1124(a)(3) and 

emphasizes a core principle of the 

Interagency Appraisal and Evaluation 

Guidelines and USPAP, which is that an 

appraiser must be not only be 

competent generally, but also have 

specific competency to perform a 

particular appraisal.36

The proposed rule also requires that 

an AMC establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC 

conducts its appraisal management 

services in accordance with: (1) The 

AMC’s obligations as a covered person 

with respect to mandatory reporting, 

conflicts of interest, and other acts or 

practices that would violate appraisal 

independence pursuant to section 

129E(a) through (e) of TILA; and (2) the 

AMC’s obligations as a creditor’s agent 

with respect to appraiser compensation 

pursuant to section 129E(i) of TILA, 15 

U.S.C. 1639e(i).37 The proposed rule 

directly imposes these requirements on 

Federally regulated AMCs. 

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19528 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

38 12 CFR 34.45 and 164.5 (OCC); 12 CFR 225.65 

(Board); 12 CFR 323.5 (FDIC). 

39See Interagency Appraisal and Evaluation 

Guidelines, 75 FR 77450, 77463 (December 10, 

2010)(discussing third party arrangements). 

40Section 1110(3), 12 U.S.C. 3339(3). 

41However, nothing in the proposed rule would 

prohibit a Federally regulated AMC from registering 

with a State if the State permitted it to do so. 

42See proposed § 34.214(a) and 15 U.S.C. 1639e 

(implemented at 12 CFR 1026.42) (implementing 

section 129E of TILA). 

43 12 U.S.C. 3353(e). 

44 12 U.S.C. 3353(d). 

45 12 U.S.C. 3353(d). 

The purpose and scope section of the 

proposed rule notes that the AMC 

minimum standards do not affect the 

responsibility of banks, Federal savings 

associations, state savings associations, 

bank holding companies, and credit 

unions for compliance with applicable 

regulations and guidance concerning 

appraisals. Under the interagency 

appraisal standards, for example, if an 

appraisal is prepared by a fee appraiser 

(as opposed to in-house, by the 

institution), the appraiser must be 

engaged directly by the regulated 

institution or its agent, and have no 

direct or indirect interest, financial or 

otherwise, in the property or the 

transaction.38 As such, as stated in the 

Interagency Appraisal and Evaluation 

Guidelines, an institution that engages a 

third party such as an AMC to act as its 

agent in administering any part of the 

institution’s appraisal program remains 

responsible for compliance with 

applicable laws concerning appraisers 

and appraisals.39

In drafting these minimum 

requirements, and the definition of 

appraisal management services 

discussed previously, the Agencies 

considered whether to require AMCs to 

follow minimum standards when 

performing appraisal reviews. The 

Agencies note that section 1110 of 

FIRREA, as amended by section 1473 of 

the Dodd-Frank Act,40 requires a 

separate rulemaking to require 

‘‘appropriate’’ appraisal review for 

compliance with USPAP in connection 

with Federally related transactions. The 

Agencies believe that the section 1110 

rulemaking provides the appropriate 

opportunity to address the requirement 

for appraisal reviews. For this reason, 

the Agencies are not proposing to issue 

appraisal review standards in this AMC 

rulemaking. 

Question 7. The Agencies request 

comment on the proposed approach to 

the appraisal review issue. 

Minimum requirements for Federally 

regulated AMCs. As explained earlier in 

this preamble, section 1124 provides 

that AMCs that are owned and 

controlled subsidiaries of an insured 

depository institution or an insured 

credit union and regulated by a Federal 

financial institutions regulatory agency, 

are not required to register with a 

State.41 These Federally regulated 

AMCs are, however, subject to the same 

minimum requirements as AMCs that 

are not regulated by a Federal financial 

institutions agency. 

The proposed rule implements these 

minimum requirements in § 34.214(a) 

using the same substantive standards 

that are proposed for AMCs that are not 

subject to regulation by a Federal 

financial institutions regulatory agency. 

Specifically, the proposed rule requires 

Federally regulated AMCs to have 

systems in place to ensure that only 

State-certified or State-licensed 

appraisers perform appraisals for 

Federally related transactions; that 

appraisers with the requisite education, 

expertise, and experience necessary for 

the assignment are used; that the 

appraisers comply with USPAP; and 

that the appraisal independence 

requirements of TILA section 129E are 

complied with.42

In addition, in order to establish a 

means for Federally regulated AMCs to 

be included in the ASC National 

Registry, the proposed rule would 

require Federally regulated AMCs to 

provide to each participating State in 

which it operates the information 

required by the ASC for administration 

of the AMC National Registry. First, the 

proposed rule would require Federally 

regulated AMCs to provide information 

related to the determination by the ASC 

of the AMC National Registry fee. This 

provision implements section 1124(e) of 

FIRREA.43 Second, the proposed rule 

would require Federally regulated 

AMCs to provide to each participating 

State the information needed to 

determine whether the limitations on 

registration or inclusion in the AMC 

National Registry under § 34.215 apply. 

See proposed § 34.215 and 

accompanying section-by-section 

analysis, below. The proposed rule 

recognizes, however, the possibility that 

a State might not establish a system for 

collecting such information from 

Federally regulated AMCs. If the State 

does not have a system for accepting 

such information and reporting it to the 

ASC, the proposed rule would direct the 

Federally regulated AMC to the ASC for 

more information on alternative means 

for submitting the information outlined 

in § 34.214(b). 

Registration limitations. Proposed 

§ 34.215 would place certain limitations 

on whether an AMC (whether or not 

Federally regulated) can be registered in 

a State or included in the National 

Registry. Proposed § 34.215 is based on 

section 1124(d) of FIRREA,44 which 

provides that an AMC shall not be 

registered by a State or included on the 

AMC National Registry if such 

company, in whole or in part, directly 

or indirectly, is owned by any person 

who has had an appraiser license or 

certificate refused, denied, cancelled, 

surrendered in lieu of revocation, or 

revoked in any State. Section 1124(d) 

provides further that each person who 

owns more than 10 percent of an AMC 

must be of good moral character, as 

determined by the State appraiser 

certifying and licensing agency, and 

must submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. 

To implement this provision, 

proposed § 34.215(a) would provide that 

an AMC may not be registered by a State 

or included on the AMC National 

Registry if such company, in whole or 

in part, directly or indirectly, is owned 

by any person who has had an appraiser 

license or certificate refused, denied, 

cancelled, surrendered in lieu of 

revocation, or revoked in any State. As 

indicated above, the statute clearly 

states that the limitations regarding 

appraiser licensure and certification 

determine both whether an AMC may be 

‘‘registered by a State’’ and whether an 

AMC may be ‘‘included on the national 

registry’’ of AMCs.45

Proposed § 34.215(b) provides that, 

for AMCs seeking to be registered in a 

State, each person who owns more than 

10 percent of an AMC must be of good 

moral character, as determined by the 

State appraiser certifying and licensing 

agency, and must submit to a 

background investigation carried out by 

the State appraiser certifying and 

licensing agency. The statute is 

ambiguous regarding whether the 

limitation regarding the moral character 

of AMC owners applies to both 

registration with a State and inclusion 

on the AMC National Registry. Given 

that the title of the statutory section is 

‘‘Registration Limitations,’’ the Agencies 

have proposed that the limitation would 

apply only with respect to AMC 

registration with a State. Under the 

proposal, this limitation would apply to 

Federally regulated AMCs only if they 

seek to register voluntarily with a State. 

Under the proposal, these threshold 

requirements concerning licensure 

would be ongoing obligations for State 

appraiser certifying and licensing 

agencies. As such, a State would be 

expected to review whether an AMC 

meets the proposed registration 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19529 

limitations, as described in the statute 

and in proposed § 34.215, at the time of 

registration of an AMC, and at the time 

of renewal of the AMC license each 

year, or more frequently as determined 

necessary by that State. 

Submission of reports to the ASC. 

Under § 34.216 of the proposed rule, 

States that establish AMC registration 

programs must submit to the ASC the 

information regarding AMCs required 

by ASC regulations and guidance. The 

proposed rule implements the 

requirement in section 1124(e) for the 

Agencies to establish these reporting 

requirements. 

Integration of FDIC and OTS Rules on 

Appraisals 

As noted previously, pursuant to Title 

III of the Dodd-Frank Act, the FDIC is 

proposing to integrate its appraisal 

regulations for both nonmember banks 

and State savings associations. 

Specifically, the FDIC proposes to 

rescind 12 CFR Part 390, Subpart X (Part 

390, Subpart X), of the former OTS 

regulation entitled ‘‘Appraisals.’’ The 

proposed rescission of Part 390, Subpart 

X completes the FDIC’s review of this 

subpart of the OTS rules for rescission, 

amendment, or adoption. This subpart 

was included in the regulations that 

were transferred to the FDIC from the 

OTS on July 21, 2011, in connection 

with the implementation of applicable 

provisions of Title III of the Dodd-Frank 

Act. Upon removal of Part 390, Subpart 

X, the appraisal regulations applicable 

for all insured depository institutions 

(‘‘IDIs’’), for which the FDIC has been 

designated the appropriate Federal 

banking agency (including State savings 

associations), will be found at 12 CFR 

Part 323, entitled ‘‘Appraisals.’’ 

Rescinding Part 390, Subpart X will 

serve to streamline the FDIC’s rules and 

eliminate redundancy and unnecessary 

regulations. The FDIC does not, 

however, see any need to make 

conforming amendments to Part 323 of 

its Regulations to accomplish this goal. 

This is because Part 323 already applies 

to ‘‘regulated institutions,’’ defined by 

section 323.1(b) as ‘‘institutions 

regulated by the FDIC.’’ As noted 

previously, under Title III of the DoddFrank Act, the FDIC is now responsible 

for the regulation of State savings 

association. The FDIC is therefore of the 

opinion that Part 323 as currently 

drafted is sufficiently broad to include 

State savings associations without any 

further amendment. If the proposal is 

adopted in final form, all insured 

depository institutions regulated by the 

FDIC, including State savings 

associations, will be regulated in a 

uniform manner. The FDIC nonetheless 

solicits comment on these proposed 

changes. 

III. Request for Comment on the 

Proposed Rule 

The Agencies request comments on 

all aspects of this proposed rule, 

including specific requests for comment 

that appear throughout the 

Supplementary Information above. In 

addition, we ask for specific comment 

on the following questions: 

Question 8. What barriers, if any, exist 

that may make it difficult for a State to 

implement the proposed AMC rules? 

Question 9. What aspects of the rule, 

if any, will be challenging for States to 

implement within 36 months? To the 

extent such challenges exist, what 

alternative approaches do commenters 

suggest that would make 

implementation easier, while 

maintaining consistency with the 

statute? 

Question 10. Are there any barriers to 

a State collecting information on 

Federally regulated AMCs and 

submitting such information to the 

ASC? And if so what are they? 

Question 11. Are any questions raised 

by any differences between State laws 

and the proposed AMC rules? Should 

these be addressed in the final AMC 

rules and, if so, how? 

IV. Regulatory Analysis 

Paperwork Reduction Act 

Certain provisions of the proposed 

rule contain ‘‘information collection’’ 

requirements within the meaning of the 

Paperwork Reduction Act (PRA) of 1995 

(44 U.S.C. 3501 et seq.). Under the PRA, 

the Agencies may not conduct or 

sponsor, and a person is not required to 

respond to, an information collection 

unless the information collection 

displays a valid Office of Management 

and Budget (OMB) control number. The 

information collection requirements 

contained in this proposed rule are 

being submitted to OMB for review and 

approval by the FDIC, FHFA, and OCC 

under section 3506 of the PRA and 

section 1320.11 of the OMB’s 

implementing regulations (5 CFR part 

1320). The Board reviewed the proposed 

rule under the authority delegated to the 

Board by OMB. 

The collection of information 

requirements in the proposed rule are 

found in §§ 34.212–34.216. This 

information is required to implement 

section 1473 of the Dodd-Frank Act. 

Title of Information Collection: 

Minimum Requirements for Appraisal 

Management Companies. 

OMB Control Nos.: The Agencies will 

be seeking new control numbers for 

these collections. 

Frequency of Response: Event 

generated. 

Affected Public: States; businesses or 

other for-profit and not-for-profit 

organizations. 

Abstract 

State Recordkeeping Requirements 

States seeking to register AMCs must 

have an AMC certifying and licensing 

program. Section 34.213(a) requires 

participating States to establish and 

maintain within its appraiser certifying 

and licensing agency a licensing 

program with the legal authority and 

mechanisms to: (i) review and approve 

or deny an application for initial 

registration; (ii) periodically review and 

renew, or deny renewal of, an AMC’s 

registration; (iii) examine an AMC’s 

books and records and require the 

submission of reports, information, and 

documents; (iv) verify an AMC’s 

certifications or licenses; (v) investigate 

and assess potential law, regulation, or 

order violations; (vi) discipline, 

suspend, terminate, or deny registration 

renewals of, AMCs that violate laws, 

regulations, or orders; and (vii) report 

violations of appraisal-related laws, 

regulations, or orders, and disciplinary 

and enforcement actions to the 

Appraisal Subcommittee. 

Section 34.213(b) requires each 

participating State to impose 

requirements on AMCs not owned and 

controlled by an insured depository 

institution and regulated by a Federal 

financial institution regulatory agency 

to: (i) Register with and be subject to 

supervision by a State appraiser 

certifying and licensing agency in each 

State in which the AMC operates; (ii) 

use only State-certified or State-licensed 

appraisers for Federally regulated 

transactions in conformity with any 

Federally regulated transaction 

regulations; (iii) establish and comply 

with processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who is independent of the 

transaction and who has the requisite 

education, expertise, and experience 

necessary to competently complete the 

appraisal assignment for the particular 

market and property type; (iv) direct the 

appraiser to perform the assignment in 

accordance with USPAP; and (v) 

establish and comply with processes 

and controls reasonably designed to 

ensure that the AMC conducts its 

appraisal management services in 

accordance with section 129E(a)–(i) of 

the Truth in Lending Act. 

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State Reporting Burden 

Section 34.216 requires that each 

State electing to register AMCs for 

purposes of permitting AMCs to provide 

appraisal management services relating 

to covered transactions in the State must 

submit to the Appraisal Subcommittee 

the information required to be 

submitted under this Subpart and any 

additional information required by the 

Appraisal Subcommittee concerning 

AMCs. 

AMC Reporting Requirements 

Section 34.214(b) requires that a 

Federally regulated AMC must report to 

the State or States in which it operates 

the information required to be 

submitted by the State pursuant to the 

Appraisal Subcommittee’s policies, 

including: (i) Policies regarding the 

determination of the AMC National 

Registry fee; and (ii) the information 

listed in § 34.215. 

Section 34.215 provides that an AMC 

may not be registered by a State or 

included on the AMC National Registry 

if such company is owned, directly or 

indirectly, by any person who has had 

an appraiser license or certificate 

refused, denied, cancelled, surrendered 

in lieu of revocation, or revoked in any 

State. Each person that owns more than 

10 percent of an appraisal management 

company shall submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. While section 34.215 does not 

authorize States to conduct background 

investigations of Federally regulated 

AMCs, it would allow a State to do so 

if the Federally regulated AMC chooses 

to register voluntarily with the State. 

AMC Recordkeeping Requirements 

Section 34.212(b) provides that an 

appraiser in an AMC’s network or panel 

is deemed to remain on the network or 

panel until: (i) The AMC sends a written 

notice to the appraiser removing the 

appraiser with an explanation; or (ii) 

receives a written notice from the 

appraiser asking to be removed or a 

notice of the death or incapacity of the 

appraiser. The AMC would retain these 

notices in its files. 

Burden Estimates 

Total Number of Respondents: 500 

AMCs, 50 States. 

Bureau: The Bureau is not seeking 

OMB approval for the information 

collection requirements already 

accounted for by the other agencies’ 

information collection requests 

submitted to OMB in association with 

this rule. 

FDIC Burden Total: 1,545 hours. 

FHFA Burden Total: 617 hours. 

OCC Burden Total: 1,545 hours. 

Board Burden Total: 1,545 hours. 

Total Burden: 5,252 hours. 

The Agencies have a continuing 

interest in the public opinion of our 

collections of information. Comments 

regarding the questions set forth below 

may be sent to the OMB desk officer for 

the Agencies by mail to U.S. Office of 

Management and Budget, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503, or by the 

Internet to oira_submission@

omb.eop.gov, with copies to the 

Agencies at the addresses listed in the 

ADDRESSES section of this 

SUPPLEMENTARY INFORMATION. 

a. Whether the information collection 

is necessary for the proper performance 

of the Agencies’ functions, and how the 

instructions can be clarified so that 

information gathered has more practical 

utility; 

b. The accuracy of the Agencies’ 

estimates of the burdens of the 

information collection, including the 

validity of the methodology and 

assumptions used; 

c. Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

d. Ways to minimize the burden of the 

information collection on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

e. Estimates of capital or startup costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

Regulatory Flexibility Act 

OCC: The Regulatory Flexibility Act 

(RFA), 5 U.S.C. 601 et seq., generally 

requires that, in connection with a 

notice of proposed rulemaking, an 

agency prepare and make available for 

public comment an initial regulatory 

flexibility analysis that describes the 

impact of a proposed rule on small 

entities. However, the regulatory 

flexibility analysis otherwise required 

under the RFA is not required if an 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities 

(defined in regulations promulgated by 

the Small Business Administration to 

include banking organizations with total 

assets of less than or equal to $500 

million) and publishes its certification 

and a brief explanatory statement in the 

Federal Register together with the rule. 

The OCC currently supervises 1,745 

banks (1,139 commercial banks, 66 trust 

companies, 492 federal savings 

associations, and 48 branches or 

agencies of foreign banks). 

Approximately 1,195 of OCC-supervised 

banks are small entities based on the 

Small Business Administration’s 

(SBA’s) definition of small entities for 

RFA purposes. The OCC classifies the 

economic impact of total costs on a bank 

as significant if the total costs in a single 

year are greater than 5 percent of total 

salaries and benefits, or greater than 2.5 

percent of total non-interest expense. 

As discussed in the SUPPLEMENTARY

INFORMATION above, section 1473 of the 

Dodd-Frank Act requires the Agencies 

to jointly prescribe regulations to 

implement the minimum requirements 

for State registration and supervision of 

AMCs. The proposal meets this 

obligation by requiring States that elect 

to register and supervise AMCs to 

impose certain requirements on AMCs. 

The proposal also requires participating 

States to have certain basic supervisory 

authorities, such as the ability to 

investigate complaints against AMCs, 

and take disciplinary action with 

respect to AMCs that violate applicable 

laws. 

The OCC believes the proposed rule 

will not have a significant economic 

impact on a substantial number of small 

entities for several reasons. First, the 

proposed rule imposes requirements 

primarily on States, not on national 

banks or Federal savings associations. 

Second, to the extent that the proposal 

imposes burden on national banks or 

Federal savings associations that own 

and control an AMC, there are only two 

such AMCs, and these are owned by 

large national banks. For these reasons, 

the OCC estimates that the average cost 

per small bank or Federal savings 

association will be zero. Therefore, the 

OCC certifies that the proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. Accordingly, an initial 

regulatory flexibility analysis is not 

required. 

Board: The RFA requires an agency to 

provide and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of a 

proposed rule on small entities. A 

regulatory flexibility analysis is not 

required, if the agency certifies that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities (defined in 

regulations of the Small Business 

Administration to include banking 

organizations with total assets of less 

than or equal to $500 million or $35.5 

million or less in annual revenues for 

the majority of nonbank entities that are 

likely to be subject to the proposed 

regulations) and publishes its 

certification and a short explanatory 

statement in the Federal Register 

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46U.S. Small Business Administration, Table of 

Small Business Size Standards Matched to North 

American Industry Classification System Codes, 

available at http://www.sba.gov/sites/default/files/

files/size_table_07222013.pdf. 47See 5 U.S.C. 601 et seq. 

48For purposes of assessing the impacts of the 

proposed rule on small entities, ‘‘small entities’’ is 

defined in the RFA to include small businesses, 

small not-for-profit organizations, and small 

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

business’’ is determined by application of Small 

Business Administration regulations and reference 

to the North American Industry Classification 

System (NAICS) classifications and size standards. 

5 U.S.C. 601(3). A ‘‘small organization’’ is any ‘‘notfor-profit enterprise which is independently owned 

and operated and is not dominant in its field.’’ 5 

U.S.C. 601(4). A ‘‘small governmental jurisdiction’’ 

is the government of a city, county, town, township, 

village, school district, or special district with a 

population of less than 50,000. 5 U.S.C. 601(5). 

49 5 U.S.C. 609. 

together with the rule.46 Based on its 

analysis, and for the reasons stated 

below, the Board believes that the final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

The proposed AMC rule applies to 

States that establish licensing and 

certifying authorities to regulate AMCs. 

In the Board’s regulatory flexibility 

analysis for this rule, the Board 

determined that approximately 32 

entities subject to Board regulation and 

supervision would be subject to the 

requirements of the rule. Data currently 

available to the Board are not sufficient 

to estimate how many of the 

approximately 32 entities subject to 

Board regulation and supervision would 

be classified as ‘‘small entities.’’ In 

addition, the number of these 32 entities 

that will be subject to State regulation 

and supervision is currently unknown 

since one or more of the entities may 

have a network or panel of contract 

appraisers that is too small to satisfy a 

threshold requirement of the proposed 

AMC rule and therefore may be exempt 

from registration. 

The proposed AMC rule does not 

impose directly any significant new 

recordkeeping, reporting, or compliance 

requirements on small entities. The 

proposed AMC rule requires those 

States electing to establish licensing and 

certifying authorities for AMCs to 

impose certain requirements on AMCs 

registered in the State. Generally, the 

RFA requires an agency to perform a 

regulatory flexibility analysis of small 

entity impacts only when the agency’s 

rule directly regulates the small entities. 

The impact of the proposed rule on 

small entities is indirect. 

In addition, while certain minimum 

requirements are imposed on 

participating States by the language of 

section 1473 of the Dodd-Frank Act, 

each State may establish additional 

requirements in addition to those 

required by section 1473. Furthermore, 

an entity with a network or panel of 

appraisers that does not meet the 

numerical test specified in section 1473 

may voluntarily register with a 

participating state and the ASC, thus 

incurring some nominal expenses in 

establishing and maintaining the 

required registration information and 

meeting the minimum operational 

requirements. Because of these 

uncertainties, calculation of the impact 

of the proposed rule on an affected 

institution or entity is uncertain, 

although the number of Boardsupervised institutions or entities 

subject to the rule is expected to be less 

than 32. 

Based on its analysis, and for the 

reasons stated above, the Board believes 

that the proposed rule, if adopted in 

final form, will not have a significant 

economic impact on a substantial 

number of small entities. The Board is 

publishing an initial regulatory 

flexibility analysis and, if necessary, 

will conduct a final regulatory 

flexibility analysis after consideration of 

comments received during the public 

comment period. 

The Board requests public comment 

on all aspects of this analysis. 

FDIC: The RFA generally requires 

that, in connection with a notice of 

proposed rulemaking, an agency prepare 

and make available for public comment 

an initial regulatory flexibility analysis 

that describes the impact of a proposed 

rule on small entities.47 A regulatory 

flexibility analysis is not required, 

however, if the agency certifies that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities (defined in 

regulations promulgated by the Small 

Business Administration to include 

banking organizations with total assets 

of less than or equal to $500 million) 

and publishes its certification and a 

short, explanatory statement in the 

Federal Register together with the rule. 

As of September 30, 2013, there were 

approximately 3,632 small FDICsupervised institutions, which include 

3,324 State nonmember banks and 308 

State-chartered savings institutions. 

The FDIC analyzed the organizational 

structure information in the Board of 

Governors of the Federal Reserve 

System’s National Information Center 

database. This analysis found that few 

FDIC-supervised institutions owned or 

controlled an entity that provides the 

types of appraisal management services 

specified in Section 1473. Of these 

institutions, none oversees a network or 

panel of appraisers that meets the 

numerical test requirement specified in 

Section 1473 for an entity to be an AMC. 

Therefore, the proposed rule would not 

have any impact on any FDICsupervised institutions. If any FDICsupervised institution that owns or 

controls an entity with a network or 

panel of appraisers that does not meet 

the numerical test specified in Section 

1473 voluntarily decides to register that 

entity with the States, then the 

institution may incur some nominal 

expenses in establishing and 

maintaining a process for providing the 

required registration information and 

meeting the minimum operational 

requirements. 

It is the opinion of the FDIC that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities that it regulates 

in light of the fact that no FDICsupervised institutions own or control 

an entity with a network or panel of 

appraisers that meets the numerical test 

requirement specified in Section 1473 

for an entity to be an AMC. Accordingly, 

the FDIC certifies that the proposed rule 

would not, if promulgated, have a 

significant economic impact on a 

substantial number of small entities. 

Thus, an initial regulatory flexibility 

analysis is not required. 

The FDIC seeks comment on whether 

the proposed rule, if adopted in final 

form, would impose undue burdens, or 

have unintended consequences for, 

small FDIC-supervised institutions and 

whether there are ways such potential 

burdens or consequences could be 

minimized in a manner consistent with 

section 1473(f) of the Dodd-Frank Act. 

Bureau: The Regulatory Flexibility 

Act (RFA) generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.48

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.49

An IRFA is not required for this 

proposed rule because the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. 

The Bureau notes that the proposed 

rule would not impose requirements on 

AMCs, but instead seeks to encourage 

States to adopt minimum requirements 

in their regulation of AMCs. 

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50The Bureau does not assume costs associated 

with the proposed rule’s requirements to ensure 

compliance with USPAP and other regulations 

because AMCs would be subject to these standards 

even without their being referenced in the proposed 

rule. 

51A state could accept the consequences on 

AMCs’ business in the state from not implementing 

the proposed rule. FIRREA section 1124(f) provides 

that three years after the proposed rule takes effect, 

AMCs cannot provide services related to Federally 

related transactions in a state that has not 

implemented the proposed rule. However, the 

Bureau understands that only a minority of 

mortgage transactions are ‘‘Federally related 

transactions’’ within the meaning of FIRREA. See, 

e.g., 12 CFR 225.62(f) (transaction must ‘‘[r]equire 

the services of an appraiser’’ to be federally related). 

But see id. at 225.63(a)(1),(9),(10) (exemptions from 

FIRREA appraisal requirements for transactions of 

$250,000 or less, transactions insured by or sold to 

a U.S. government agency, and transactions that 

conform to GSE appraisal standards). However, the 

Bureau believes all states will choose to participate. 

52As of the Bureau’s 2013 review of State laws, 

the application fee in Vermont was $125. See http:// 

vtprofessionals.org/opr1/real_estate_appraisers/

AMC/AMC_Application.pdf. The application fee in 

Vermont is $125. The annual renewal fee is $250. 

See http: 

//vtprofessionals.org/opr1/real_estate_appraisers/

AMC/Appraisal%20Management%20Company%20

Renewal%202013.pdf.http://vtprofessionals.org/

opr1/real_estate_appraisers/AMC/Appraisal%20

Management%20Company%20Renewal%

202013.pdf. In addition, while some States may 

elect to impose additional requirements relating to 

examination and inspection of their AMCs, the 

Bureau does not believe that the minimum 

requirements that states must provide would lead 

to significant costs for AMCs. 

53See 12 U.S.C. 3338. 

54See, e.g., Vermont Statutes Title 26 section 

3324 (requiring AMCs to ‘‘retain all records related 

to an appraisal, review, or consulting assignment 

for no less than five years . . . [and w]ith 

reasonable notice, a licensee or registrant shall 

produce any records governed by this section for 

inspection and copying by the board or its 

authorized agent.’’). 

55 In addition, the Bureau does not believe that in 

States that add this requirement there will be any 

significant new burden on the AMCs. The Bureau 

believes that the AMCs already keep their books 

and records in order as a standard course of 

business practice, and thus the occasional State 

examiner visits should not impose any significant 

burden. In addition, the proposed rule requires only 

that the State have the authority and mechanism to 

request records and information. The proposed rule 

does not require that the State exercise this 

authority and any burdensome exercise of this 

authority would therefore not be caused by the 

proposed rule. Finally, to the extent State 

supervision programs do increase burden, the 

Bureau believes this burden would be within the 

sensitivity tolerances described in the footnote at 

the end of this section. 

56These requirements also would not result in 

new burden on Federally regulated AMCs, for the 

same reason. Federally regulated AMCs do not have 

to comply with state registration and renewal 

requirements, which can entail fees. Conservatively, 

however, the Bureau applied the State fee burden 

to all of the small AMCs in its calculation method 

described herein. As a result, the estimated burden 

of State fees associated with the proposed rule may 

be overestimated. 

Nonetheless, to inform the rulemaking 

and to inform the public, the Bureau has 

exercised its discretion to analyze 

economic impacts that may be imposed 

by States on AMCs if the proposed rule 

were adopted.50 For this purpose, the 

Bureau assumed States that have not yet 

passed an AMC licensing and 

registration law (14 States, as of July 

2013; this number is expected to 

decrease by the time the Agencies adopt 

a final rule) would all elect to pass such 

a law and establish an AMC licensing 

and supervision program that satisfies 

the standards of the proposed rule. This 

assumption is taken to establish an 

outer bound. Because the proposed rule 

does not require States to adopt the 

minimum requirements in the proposed 

rule, however, it is possible that not all 

14 States would do so.51

State registration fees would 

constitute the primary economic impact 

of the proposed rule. In estimating the 

impact of the proposed rule in the 14 

States that have not yet passed an AMC 

licensing and registration law as of July 

2013, the Bureau notes that State fees 

vary widely. Such State registration and 

renewal fees are not necessarily for the 

sole purpose of recovering costs of 

administering the minimum 

requirements under the proposed rule. 

States can impose charges for a variety 

of reasons, including to raise revenue 

(independent of the cost of the 

registration regime) or to fund the 

administration of a regime that exceeds 

the minimum requirements under the 

proposed rule. The Bureau believes that 

the fee charged by Vermont—$125 for 

registration and $250 for annual 

renewal—would be sufficient to comply 

with the proposed rule.52 The Bureau 

therefore considered this fee in 

estimating the economic impact of the 

proposed rule in the 14 States that do 

not yet have AMC registration 

requirements. As discussed below, 

however, the Bureau also considered 

more conservative estimates of the 

impact of the proposed rule using 

significantly higher fee amounts. 

With respect to the Federal 

registration fee, the Bureau notes that 

the proposed rule neither requires 

collection of registration fees by the 

Appraisal Subcommittee (ASC) nor 

authorizes the collection of such fees. 

The Dodd-Frank Act grants that 

authority exclusively to the ASC.53

Therefore, the Bureau does not consider 

any fees imposed on AMCs by the ASC 

(whether directly or through the States 

for forwarding to the ASC) as an impact 

of the proposed rule. 

An additional requirement in the 

proposed rule is that the State AMC 

licensing programs have authority and 

mechanisms to examine books and 

records of the AMCs, to otherwise 

obtain information from the AMCs, and 

to discipline AMCs. The Bureau 

believes that existing State registration 

fees generally already account for the 

cost to the States of having such 

authority and mechanisms, and that the 

requirement in the proposed rule 

therefore would not lead to higher 

registration fees in any significant 

amount.54 Accordingly, in the 14 States 

that would adopt new registration and 

renewal systems, the Bureau believes 

the registration fee currently charged in 

Vermont would cover the State’s cost 

associated with implementing this 

requirement. 

The Bureau notes that the proposed 

rule is not prescriptive as to how or 

when the States must exercise the 

authority or mechanisms. Exercise of 

such authority and mechanisms is 

determined by the discretion of the 

States, subject to monitoring by the ASC 

for effectiveness in the judgment or 

discretion of the ASC. Accordingly, to 

the extent that State exercise of such 

authority and mechanisms leads to 

burden on small entities, such burden 

would be attributable to such State 

implementation and/or ASC oversight 

expectations rather than to the proposed 

rule itself. Therefore, State statutes that 

implement this requirement relating to 

establishing examination authority and 

mechanisms are not expected to cause 

fee increases or new burden above the 

$125 overall baseline assumed for 

purposes of this analysis.55

Similarly, the Bureau believes that 

other minimum requirements for AMCs 

under the proposed rule (verifying the 

use of licensed or certified status of 

appraisers, requiring that appraisers 

comply with USPAP, complying with 

any contractual review provisions, and 

establishing and complying with 

processes to ensure appraisers are 

qualified and independent and that the 

AMC acts in compliance with 

applicable appraisal independence 

regulations), as well as the standard for 

removing appraisers from the appraiser 

panel, would not result in new burden 

on AMCs because these standards 

merely reinforce existing compliance 

requirements as well as industry 

practice.56 The Bureau further notes that 

States have discretion to interpret the 

requirements to establish processes and 

controls to ensure compliance, subject 

to monitoring by the ASC for 

effectiveness in the judgment or 

discretion of the ASC. Accordingly, to 

the extent that State interpretations of 

such requirements leads to burden on 

small entities, such burden would be 

attributable to such State 

implementation and/or ASC oversight 

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57One of the AMCs did not report its revenue. 

58NAICS code 531320—Offices of Real Estate 

Appraisers—includes ‘‘appraisal services,’’ which 

we believe would include services provided by 

AMCs in the processing and review of appraisals. 

An alternative classification would be NAICS code 

561110—Office Administrative Services. In any 

event, this code also has an SBA threshold of 

$7,000,000. 

59The Bureau assumed that an AMC that 

operated in x states needs to register in additional 

(14/50)*x states. This assumption results in a (14/ 

50)*x*$250 state registration and renewal fee 

burden on an AMC operating in x states. 

60The Bureau notes that the percentage of small 

institutions for which the estimated burden of the 

proposed rule would amount to over 3 percent of 

the revenue would remain under 1 percent even if 

the Bureau had used the following alternative 

assumptions: (1) $5,250 as the assumed burden of 

the proposed rule for states that adopt new 

registration regimes—the highest among the 

existing State registration fees as of the Bureau’s 

2013 review of state laws (in Minnesota), and 

assumed this same amount as the annual renewal 

fee (even though the Minnesota renewal fee at the 

time of the review was only $2,650); and (2) an 

additional annual labor cost of $300 for any 

possible associated burden of (a) filling out 

registration and renewal forms in those states 

(assuming an AMC operates in approximately 20 

States on average, such that 6.26 of those States 

adopt new AMC licensing programs) and any 

additional burden related to notices from small 

AMCs removing appraisers from their panels in 

those states. The percentages of institutions for 

which this cost would amount to over 1 percent of 

the revenue changed, respectively, to 18 percent, 13 

percent, and 9 percent of the small institutions 

affected, according to the normal, generalized 

extreme value, and logistic distributions. 

expectations rather than to the proposed 

rule itself. 

Just as these conduct standards would 

not impose a significant burden on 

AMCs required to register at the State 

level, the Bureau does not believe they 

would impose significant burdens on 

Federally regulated AMCs either. See 

Interagency Appraisal and Evaluation 

Guidelines, 75 FR 77450 (Dec. 10, 2010) 

(Interagency Guidelines). The 

Interagency Guidelines, part VI, already 

require Federal financial institutions to 

select appraisers who are certified or 

licensed, qualified, in compliance with 

USPAP, and independent. 75 FR at 

77458. AMCs that are affiliated with 

Federal financial institutions frequently 

perform appraisals for their affiliates. 

Therefore, it can be assumed that in 

delegating these functions to AMCs, 

these Federal financial institutions also 

delegate these requirements from part VI 

of the Interagency Guidelines to these 

AMCs. 

To estimate the impact of the 

proposed rule on small AMCs, the 

Bureau conducted a survey. The Bureau 

called nine AMCs, picked randomly 

from a list of approximately 500 AMCs 

provided by industry trade associations. 

The AMCs were asked for certain basic 

data including the number of States in 

which they operate, their revenue 

(including the revenue from any nonappraisal business), and the number of 

appraisals that they performed in 

2012.57 The Bureau estimated the 

revenue to be the number of appraisals 

performed in 2012 multiplied by $350— 

the average appraisal cost assumed in 

the Agencies’ analysis under section 

1022 of the Dodd-Frank Act in the 2013 

Interagency Appraisals Rule. This 

revenue estimate is likely to be 

underestimated, given that several 

AMCs out of nine reported additional 

revenue that was not due to the 

residential appraisal business. Out of 

the nine AMCs, seven had revenues of 

less than $7,000,000 in 2012, and thus 

would be within the scope of the RFA 

analysis based upon Small Business 

Administration guidelines.58 The 

Bureau computed the cost of registration 

and renewal fees in States that do not 

already have them, allocated these costs 

to individual AMCs based upon the 

number of States in which the AMC 

operated,59 and computed the ratio of 

these allocated costs to the AMCs’ 

revenues. 

The Bureau acknowledges that 

requiring AMCs to send letters to the 

appraisers that the AMC decides to 

remove from its panel might add burden 

in States that do not already have 

registration requirements (which 

typically include notice provisions). 

The Bureau does not possess any 

evidence on the number of appraisers to 

whom an AMC would have to send 

these letters. According to the Bureau of 

Labor and Statistics’ October 2013 

preliminary numbers (available at 

http://www.bls.gov/news.release/

jolts.t11.htm), 1.9 percent of the labor 

force in the real estate and rental and 

leasing industry was either laid off or 

discharged in the most recent month. 

Thus, the Bureau estimates that an AMC 

will dismiss approximately a quarter of 

appraisers from its panel in any given 

year. The Bureau assumes that each 

AMC will have several standardized 

letters explaining the reason for 

dismissal: For example, changing 

economic conditions or the appraiser’s 

violation of USPAP or work 

performance issues. Each AMC might 

incur a minimal one-time cost to draft 

these letters, with some industry 

associations potentially providing 

templates. After this minimal one-time 

cost is incurred, the ongoing cost would 

include a minimal adjustment of the 

letter based on the appraiser’s particular 

circumstances and the actual printing 

and mailing cost. These letters also 

could be sent in batches, periodically, 

such as on an annual basis. Thus, for the 

purposes of this analysis, the Bureau 

implicitly accounts for these costs in the 

sensitivity analyses below (which use a 

State fee to $5,250 and include a $300 

administrative expense). The Bureau 

requests comments on availability of 

data on these costs. 

The Bureau then fit the received ratios 

using three different distributions: 

normal, generalized extreme value, and 

logistic. The three different distributions 

were used because no a priori 

assumptions regarding how these ratios 

are distributed can be made. The three 

distributions mentioned above are 

commonly used by empirical 

researchers to fit observed values. 

Considering the costs imposed by the 

States as a result of the proposed rule, 

the Bureau believes that less than 1 

percent of the small entities would 

experience a cost of over 1 percent of 

their revenue, using either the normal, 

or the logistic, or the generalized 

extreme value distributions.60 The 

Bureau also notes that because the 

sample did not include any AMCs that 

were either too small (for example, less 

than 15 appraisers in one State) or that 

were subsidiaries of Federally regulated 

financial institutions, these estimates 

are likely overstated. 

The Bureau seeks comment on the 

data used in its analysis as well as the 

methodology for estimating burden 

described in this analysis, including 

data from States that have existing 

registration and renewal regimes on 

whether the proposed minimum 

requirements would lead them to 

change their laws and impose any new 

fees (which this analysis assumes would 

not occur). In addition, as noted in the 

section-by-section analysis above, the 

Agencies are seeking comment on the 

proposed approach of not imposing 

minimum requirements for appraisal 

reviews or defining appraisal review 

and verification activities. The Bureau 

seeks data on the types of review and 

verification services provided by AMCs, 

and in particular, AMCs that meet the 

definition of small entities, as well as 

the frequency with which each type of 

practice is performed. Further, the 

Bureau seeks data on the potential 

impact of any minimum review 

requirements or review and verification 

definitions—such as requirements or 

definitions that would be set at a level 

above administrative checks for 

grammatical errors or other technical or 

computerized quality checks that are 

not performed by licensed appraisers. 

Certification 

Accordingly, the Bureau Director, by 

signing below, certifies that this 

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61 5 U.S.C. 601 et seq. 

62 78 FR 4032 (Jan. 18, 2013). 

proposal, if adopted, would not have a 

significant economic impact on a 

substantial number of small entities. 

FHFA: The Regulatory Flexibility Act 

(5 U.S.C. 601 et seq.) requires an agency 

to analyze a proposed regulation’s 

impact on small entities if the final rule 

is expected to have a significant 

economic impact on a substantial 

number of small entities. 5 U.S.C. 

605(b). The proposed rule implements 

Section 1124 of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act and establishes 

minimum requirements to be imposed 

by a participating State appraiser 

certifying and licensing agency on 

AMCs doing business in the State. 

FHFA has considered the impact of this 

regulation and determined that it is not 

likely to have a significant economic 

impact on a substantial number of small 

entities because States and FHFA’s 

regulated entities—Fannie Mae, Freddie 

Mac, and the Federal Home Loan 

Banks—are not small entities for 

purposes of the Regulatory Flexibility 

Act. See 5 U.S.C. 601(6). 

NCUA: The Regulatory Flexibility Act 

(RFA) 61 requires NCUA to provide an 

initial regulatory flexibility analysis 

with a proposed rule to certify that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities and publish its 

certification and a short explanatory 

statement in the Federal Register also 

with the proposed rule.62 As explained 

above, the requirements of this 

proposed rule would only apply directly 

to AMC subsidiaries owned and 

controlled by an insured depository 

institution, or an insured credit union, 

and regulated by a Federal financial 

institutions regulatory agency. NCUA, 

unlike the other banking agencies to this 

rulemaking, does not directly oversee or 

regulate any subsidiaries owned and 

controlled by credit unions, including 

AMC subsidiaries. Rather, NCUA’s 

regulations permit Federal credit unions 

to invest in or lend only to credit union 

service organizations (CUSOs) that 

conform to specific requirements 

outlined in part 712 of the NCUA’s 

regulations. Because NCUA does not 

directly regulate or oversee CUSOs 

owned by State or federally chartered 

credit unions, NCUA is not proposing 

regulatory text or proposing any 

requirements through this rulemaking 

that would directly affect small entities. 

Accordingly, the NCUA Board certifies 

the proposed rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Unfunded Mandates Reform Act of 1995 

Determination 

OCC: The OCC has analyzed the 

proposed rule under the factors in the 

Unfunded Mandates Reform Act of 1995 

(UMRA) (2 U.S.C. 1532). Under this 

analysis, the OCC 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 reasons, the 

OCC finds that the proposal does not 

trigger the $100 million UMRA 

threshold. First, the mandates in the 

proposed rule apply only to those States 

that choose to establish an AMC 

registration system. Second, the costs 

specifically related to requirements set 

forth in law are excluded from 

expenditures under the UMRA. Given 

that the proposed rule reflects 

requirements that arise from section 

1473, the UMRA cost estimate for the 

proposal, if implemented, is zero. For 

this reason, and for the other reasons 

cited above, the OCC 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 Unfunded 

Mandates Act. 

List of Subjects 

12 CFR Part 34 

Appraisal, Appraiser, Banks, Banking, 

Consumer protection, Credit, Mortgages, 

National banks, Reporting and 

recordkeeping requirements, Savings 

associations, Truth in lending. 

12 CFR Part 208 

Accounting, Agriculture, Banks, 

Banking, Confidential business 

information, Consumer protection, 

Crime, Currency, Insurance, 

Investments, Mortgages, Reporting and 

recordkeeping requirements, Securities. 

12 CFR Part 225 

Administrative practice and 

procedure, Banks, Banking, Federal 

Reserve System, Holding companies, 

Reporting and recordkeeping 

requirements, Securities. 

12 CFR Part 323 

Banks, banking, Mortgages, Reporting 

and recordkeeping requirements, 

Savings associations. 

12 CFR Part 1026 

Advertising, Appraisal, Appraiser, 

Banks, Banking, Consumer protection, 

Credit, Credit unions, Mortgages, 

National banks, Reporting and 

recordkeeping requirements, Savings 

associations, Truth in lending. 

12 CFR Part 1222 

Appraisals, Government sponsored 

enterprises, Mortgages. 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

Authority and Issuance 

For the reasons set forth in the 

preamble, the OCC proposes to amend 

12 CFR part 34 as follows: 

PART 34—REAL ESTATE LENDING 

AND APPRAISALS 

■ 1. The authority citation for part 34 is 

revised to read as follows: 

Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 

371, 1463, 1465, 1701j–3, 1828(o), 3331 et 

seq., 5101 et seq., and 5412(b)(2)(B) and 15 

U.S.C. 1639h. 

■ 2. Subpart H to part 34 is added to 

read as follows: 

Subpart H—Appraisal Management 

Company Minimum Requirements 

Sec. 

34.210 Authority, purpose, and scope. 

34.211 Definitions. 

34.212 Appraiser panel. 

34.213 Appraisal management company 

registration. 

34.214 Requirements for Federally 

regulated appraisal management 

companies. 

34.215 Registration limitations. 

34.216 Information to be presented to the 

Appraisal Subcommittee by participating 

States. 

§ 34.210 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

by the Office of the Comptroller of the 

Currency under 12 U.S.C. 93a and Title 

XI of the Financial Institutions Reform, 

Recovery, and Enforcement Act 

(FIRREA), as amended by the DoddFrank Wall Street Reform and Consumer 

Protection Act (the Dodd-Frank Act) 

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

12 U.S.C. 3331 et seq. 

(b) Purpose. The purpose of this 

subpart is to implement sections 1109, 

1117, 1121, and 1124 of FIRREA Title 

XI, 12 U.S.C. 3338, 3346, 3350, and 

3353. 

(c) Scope. This subpart applies to 

States and to appraisal management 

companies (AMCs) providing appraisal 

management services in connection 

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4 75 FR 77450 (December 10, 2010). 

with consumer credit transactions 

secured by a consumer’s principal 

dwelling or securitizations of those 

transactions. 

(d) Rule of construction. Nothing in 

this subpart should be construed to 

prevent a State from establishing 

requirements in addition to those in this 

subpart. In addition, nothing in this 

subpart should be construed to alter 

guidance in, and applicability of, the 

Interagency Appraisal and Evaluation 

Guidelines 4 or other relevant agency 

guidance that cautions banks, bank 

holding companies, Federal savings 

associations, state savings associations, 

and credit unions, as applicable, that 

each such entity is accountable for 

overseeing the activities of third party 

service providers and ensuring that any 

services provided by a third party 

comply with applicable laws, 

regulations, and supervisory guidance 

applicable directly to the financial 

institution. 

§ 34.211 Definitions. 

For purposes of this subpart: 

(a) Affiliate has the meaning provided 

in 12 U.S.C. 1841. 

(b) AMC National Registry means the 

registry of State-registered appraisal 

management companies (AMCs) and 

Federally regulated AMCs maintained 

by the Appraisal Subcommittee. 

(c)(1) Appraisal management 

company (AMC) means a person that: 

(i) Provides appraisal management 

services to creditors or to secondary 

mortgage market participants, including 

affiliates; 

(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 year, oversees an 

appraiser panel of more than 15 Statecertified or State-licensed appraisers in 

a State or 25 or more State-certified or 

State-licensed appraisers in two or more 

States, as described in § 34.212; 

(2) An AMC does not include a 

department or division of an entity that 

provides appraisal management services 

only to that entity. 

(d) Appraisal management services 

means 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. 

(e) Appraiser panel means a network 

or panel of licensed or certified 

appraisers who are independent 

contractors to the AMC. 

(f) Appraisal Subcommittee means the 

Appraisal Subcommittee of the Federal 

Financial Institutions Examination 

Council. 

(g) Consumer credit has the meaning 

provided in 12 CFR 1026.2(a)(12). 

(h) Covered transaction means any 

consumer credit transaction secured by 

the consumer’s principal dwelling. 

(i) Creditor has the meaning provided 

in 12 CFR 1026.2(a)(17). 

(j) Federally regulated AMC means an 

AMC that is owned and controlled by an 

insured depository institution, as 

defined in 12 U.S.C. 1813, or an insured 

credit union, as defined in 12 U.S.C. 

1752, and that is regulated by the Office 

of the Comptroller of the Currency, the 

Board of Governors of the Federal 

Reserve System, the National Credit 

Union Administration, or the Federal 

Deposit Insurance Corporation. 

(k) Federally related transaction 

regulations 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, or the National Credit 

Union Administration, pursuant to 

sections 1112, 1113, and 1114 of 

FIRREA Title XI, 12 U.S.C. 3341–3343. 

(l) Person has the meaning in 12 CFR 

1026.2(a)(22). 

(m) Principal dwelling means a 

residential structure that contains one to 

four units, whether or not that structure 

is attached to real property, that is also 

a consumer’s primary residence. The 

term includes an individual 

condominium unit, cooperative unit, 

mobile home, and trailer, if it is used as 

a residence. A vacation or other second 

home is not a principal dwelling. A 

consumer can have only one principal 

dwelling at a time. 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. 

(n) Secondary mortgage market 

participant means a guarantor or insurer 

of mortgage-backed securities, or an 

underwriter or issuer of mortgagebacked securities. Secondary mortgage 

market participant only includes an 

individual investor in a mortgagebacked security if that investor also 

serves in the capacity of a guarantor, 

insurer, underwriter, or issuer for the 

mortgage-backed security. 

(o) States mean the 50 States and the 

District of Columbia and the territories 

of Guam, Mariana Islands, Puerto Rico, 

and the U.S. Virgin Islands. 

(p) Uniform Standards of Professional 

Appraisal Practice (USPAP) means the 

appraisal standards promulgated by the 

Appraisal Standards Board of the 

Appraisal Foundation. 

§ 34.212 Appraiser panel. 

For purposes of determining whether, 

within a given year, an AMC oversees 

an appraiser panel of more than 15 

State-certified or State-licensed 

appraisers in a State or 25 or more Statecertified or State-licensed appraisers in 

two or more States under 

§ 34.211(c)(1)(iii)— 

(a) An appraiser is deemed part of the 

AMC’s appraiser panel as of the earliest 

date on which the AMC: 

(1) Affirms eligibility or acceptance of 

the appraiser for the AMC’s 

consideration for future appraisal 

assignments; or 

(2) Engages the appraiser to perform 

one or more appraisals on behalf of a 

creditor or secondary mortgage market 

principal. 

(b) An appraiser who is deemed part 

of the AMC’s appraiser panel pursuant 

to paragraph (a) of this section is 

deemed to remain on the panel until the 

date on which the AMC: 

(1) Sends written notice to the 

appraiser removing the appraiser from 

the appraiser panel, with an explanation 

of its action; or 

(2) Receives written notice from the 

appraiser asking to be removed from the 

appraiser panel or notice of the death or 

incapacity of the appraiser. 

(c) If an appraiser is removed from an 

AMC’s appraiser panel pursuant to 

paragraph (b) of this section, but the 

AMC subsequently re-admits or engages 

the appraiser at any time during the 

twelve months after the AMC’s removal, 

the removal will be deemed not to have 

occurred, and the appraiser will be 

deemed to have been part of the AMC’s 

appraiser panel without interruption. 

(d) The annual period for purposes of 

counting appraisers on an AMC’s 

appraiser panel may be the calendar 

year or a 12-month period established 

by law or rule of each State with which 

the AMC is required to register. 

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19536 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

§ 34.213 Appraisal management company 

registration. 

Each State electing to register AMCs 

pursuant to paragraph (b)(1) of this 

section must: 

(a) Establish and maintain within the 

State appraiser certifying and licensing 

agency a licensing program that is 

subject to the limitations set forth in 

§ 34.215 and with the legal authority 

and mechanisms to: 

(1) Review and approve or deny an 

AMC’s application for initial 

registration; 

(2) Review and renew or review and 

deny an AMC’s registration periodically; 

(3) Examine the books and records of 

an AMC operating in the State and 

require the AMC to submit reports, 

information, and documents; 

(4) Verify that the appraisers on the 

AMC’s appraiser list, network, panel, or 

roster hold valid State certifications or 

licenses, as applicable; 

(5) Conduct investigations of AMCs to 

assess potential violations of applicable 

appraisal-related laws, regulations, or 

orders; 

(6) Discipline, suspend, terminate, or 

deny renewal of the registration of an 

AMC that violates applicable appraisalrelated laws, regulations, or orders; and 

(7) Report an AMC’s violation of 

applicable appraisal-related laws, 

regulations, or orders, as well as 

disciplinary and enforcement actions 

and other relevant information about an 

AMC’s operations, to the Appraisal 

Subcommittee. 

(b) Impose requirements on AMCs 

that are not owned and controlled by an 

insured depository institution or by an 

insured credit union and not regulated 

by a Federal financial institutions 

regulatory agency to: 

(1) Register with and be subject to 

supervision by the State appraiser 

certifying and licensing agency; 

(2) Use only State-certified or Statelicensed appraisers for Federally related 

transactions in conformity with any 

Federally related transaction 

regulations; 

(3) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who is independent of the 

transaction and who has the requisite 

education, expertise, and experience 

necessary to competently complete the 

appraisal assignment for the particular 

market and property type; 

(4) Direct the appraiser to perform the 

assignment in accordance with USPAP; 

and 

(5) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC 

conducts its appraisal management 

services in accordance with the 

requirements of section 129E(a)–(i) of 

the Truth in Lending Act, 15 U.S.C. 

1639e(a)–(i), and regulations 

thereunder. 

§ 34.214 Requirements for Federally 

regulated appraisal management 

companies. 

(a) Requirements in providing 

services. To provide appraisal 

management services for a creditor or 

secondary mortgage market participant 

relating to a covered transaction, a 

Federally regulated AMC must comply 

with the requirements in §§ 34.213(b)(2) 

through (5). 

(b) Reporting information for the AMC 

National Registry. A Federally regulated 

AMC must: 

(1) Report to the State or States in 

which it operates the information 

required to be submitted by the State 

pursuant to the Appraisal 

Subcommittee’s policies regarding: 

(i) The determination of the AMC 

National Registry fee, including but not 

necessarily limited to a statement that 

the AMC is a Federally regulated AMC; 

and 

(ii) The collection of information 

related to the limitations set forth in 

§ 34.215, as applicable. 

(2) Contact the Appraisal 

Subcommittee for alternative 

arrangements to submit the information 

described in paragraph (b)(1) of this 

section if a State in which a Federally 

regulated AMC operates has not 

established a process for accepting the 

information from Federally regulated 

AMCs. 

§ 34.215 Registration limitations. 

(a) Appraiser certification or licensing 

of owners. An AMC shall not be 

registered by a State or included on the 

AMC National Registry if such AMC, in 

whole or in part, directly or indirectly, 

is owned by any person who has had an 

appraiser license or certificate refused, 

denied, cancelled, surrendered in lieu of 

revocation, or revoked in any State. 

(b) Good moral character of owners. 

An AMC shall not be registered by a 

State if any person that owns more than 

10 percent of the AMC— 

(1) Is determined by the State 

appraiser certifying and licensing 

agency not to have good moral 

character; or 

(2) Fails to submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. 

§ 34.216 Information to be presented to the 

Appraisal Subcommittee by participating 

States. 

Each State electing to register AMCs 

for purposes of permitting AMCs to 

provide appraisal management services 

relating to covered transactions in the 

State must submit to the Appraisal 

Subcommittee the information required 

to be submitted by Appraisal 

Subcommittee regulations or guidance 

concerning AMCs that operate in the 

State. 

Board of Governors of the Federal 

Reserve System 

For the reasons set forth in the 

preamble, the Board proposes to amend 

12 CFR parts 208 and 225, as follows: 

PART 208—MEMBERSHIP OF STATE 

BANKING INSTITUTIONS IN THE 

FEDERAL RESERVE SYSTEM 

(REGULATION H) 

■ 3. The authority citation for part 208 

is revised to read as follows: 

Authority: 12 U.S.C. 24, 36, 92a, 93a, 

248(a), 248(c), 321–338a, 371d, 461, 481–486, 

601, 611, 1814, 1816, 1818, 1820(d)(9), 

1833(j), 1828(o), 1831, 1831o, 1831p–1, 

1831r–1, 1831w, 1831x, 1835a, 1882, 2901– 

2907, 3105, 3310, 3331–3351, 3353, and 

3905–3909; 15 U.S.C. 78b, 78l(b), 78l(i), 780– 

4(c)(5), 78q, 78q–1, 78w, 1681s, 1681w, 6801 

and 6805; 31 U.S.C. 5318; 42 U.S.C. 4012a, 

4104b, 4106, and 4128. 

■ 4. Revise the heading of subpart E to 

read as follows: 

Subpart E—Real Estate Lending, 

Appraisal Standards, and Minimum 

Requirements for Appraisal 

Management Companies 

■ 5. Section 208.50 is revised to read as 

follows: 

§ 208.50 Authority, purpose, and scope. 

(a) Authority. Subpart E of Regulation 

H (12 CFR part 208, subpart E) is issued 

by the Board of Governors of the Federal 

Reserve System under section 304 of the 

Federal Deposit Insurance Corporation 

Improvement Act of 1991, (12 U.S.C 

1828(o)), Title XI of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act, (12 U.S.C 3331–3351), 

and section 1473 of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act, (12 U.S.C. 3353). 

(b) Purpose and scope. This subpart E 

prescribes standards for real estate 

lending to be used by member banks in 

adopting internal real estate lending 

policies. The standards applicable to 

appraisals rendered in connection with 

federally related transactions entered 

into by member banks and the 

minimum requirements for Appraisal 

Management Companies are set forth in 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19537 

1 75 FR 77450 (December 10, 2010). 

12 CFR part 225, subparts G and M 

respectively (Regulation Y). 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 6. The authority citation for part 225 

is revised to read as follows: 

Authority: 12 U.S.C. 1844(b), 3106 and 

3108, 1817(j)(13), 1818(b), 1831i, 1972, 3310, 

3331–3351 and 3353 and the International 

Lending Supervision Act of 1983 (Pub. L. 98– 

181, title IX). The BHC Act is codified at 12 

U.S.C. 1841, et seq. 

■ 7. Subpart M is added to part 225 to 

read as follows: 

Subpart M—Minimum Requirements 

for Appraisal Management Companies 

Sec. 

225.190 Authority, purpose, and scope. 

225.191 Definitions. 

225.192 Appraiser panel. 

225.193 Appraisal management company 

registration. 

225.194 Requirements for Federally 

regulated appraisal management 

companies. 

225.195 Registration limitations. 

225.196 Information to be presented to the 

Appraisal Subcommittee by participating 

States. 

§ 225.190 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

by the Board of Governors of the Federal 

Reserve System (the Board) under title 

XI of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 

(FIRREA) (Pub. L. No. 101–73, 103 Stat. 

183 (1989)), 12 U.S.C. 3310, 3331–3351, 

section 1473 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act, 12 U.S.C. 3353, and section 5(b) of 

the Bank Holding Company Act, 12 

U.S.C. 1844(b). 

(b) Purpose and scope. (1) The 

purpose of this subpart is to implement 

sections 1109, 1117, 1121, and 1124 of 

FIRREA Title XI, 12 U.S.C. 3338, 3346, 

3350, and 3353. 

Title XI provides protection for 

federal financial and public policy 

interests in real estate related 

transactions by requiring real estate 

appraisals used in connection with 

federally related transactions to be 

performed in writing, in accordance 

with uniform standards, by appraisers 

whose competency has been 

demonstrated and whose professional 

conduct will be subject to effective 

supervision. This subpart implements 

the requirements of title XI as amended 

by the Dodd-Frank Wall Street Reform 

and Consumer Protection Act and 

applies to all federally related 

transactions entered into by the Board 

or by institutions regulated by the Board 

and applies to States and to appraisal 

management companies (AMCs) 

performing appraisal management 

services in connection with consumer 

credit transactions secured by a 

consumer’s principal dwelling or 

securitizations of those transactions. 

(2) This subpart: 

(i) Identifies which real estate related 

financial transactions require the 

services of an appraiser. 

(ii) Prescribes which categories of 

federally related transactions shall be 

appraised by a State certified appraiser 

and which by a State licensed appraiser; 

(iii) Prescribes minimum standards 

for the performance of real estate 

appraisals in connection with federal 

related transactions under the 

jurisdiction of the Board; 

(iv) Prescribes minimum requirements 

to be applied by participating States in 

the registration and supervision of 

appraisal management companies 

(AMCs); and 

(v) Prescribes minimum requirements 

to be applied by participating States to 

report certain information concerning 

appraisal management companies 

registered with the States to a national 

registry of appraisal management 

companies. 

(c) Rule of construction. Nothing in 

this subpart should be construed to 

prevent a State from establishing 

requirements in addition to those in this 

subpart. In addition, nothing in this 

subpart should be construed to alter 

guidance in, and applicability of, the 

Interagency Appraisal and Evaluation 

Guidelines 1 or other relevant agency 

guidance that cautions banks and bank 

holding companies, that each 

organization is accountable for 

overseeing the activities of third party 

service providers and ensuring that any 

services provided by a third party 

comply with applicable laws, 

regulations, and supervisory guidance 

applicable directly to the creditor. 

§ 225.191 Definitions. 

For purposes of this subpart: 

(a) Affiliate has the meaning provided 

in 12 U.S.C. 1841. 

(b) AMC National Registry means the 

registry of State-registered appraisal 

management companies (AMCs) and 

Federally regulated AMCs maintained 

by the Appraisal Subcommittee. 

(c) Appraisal Foundation means the 

Appraisal Foundation established on 

November 30, 1987, as a not-for-profit 

corporation under the laws of Illinois. 

(d)(1) Appraisal management 

company (AMC) means a person that: 

(i) Provides appraisal management 

services to creditors or to secondary 

mortgage market participants, including 

affiliates; 

(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 year, oversees an 

appraiser panel of more than 15 Statecertified or State-licensed appraisers in 

a State or 25 or more State-certified or 

State-licensed appraisers in two or more 

States, as described in § 225.192; 

(2) An AMC does not include a 

department or division of an entity that 

provides appraisal management services 

only to that entity. 

(e) Appraisal management services 

means 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. 

(f) Appraiser panel means a network 

or panel of licensed or certified 

appraisers who are independent 

contractors to the AMC. 

(g) Consumer credit has the meaning 

provided in 12 CFR 1026.2(a)(12). 

(h) Covered transaction means any 

consumer credit transaction secured by 

the consumer’s principal dwelling. 

(i) Creditor has the meaning provided 

in 12 CFR 1026.2(a)(17). 

(j) Federally regulated AMC means an 

AMC that is owned and controlled by an 

insured depository institution, as 

defined in 12 U.S.C. 1813, or an insured 

credit union, as defined in 12 U.S.C. 

1752, and regulated by the Office of the 

Comptroller of the Currency, the Board 

of Governors of the Federal Reserve 

System, the Federal Deposit Insurance 

Corporation or the National Credit 

Union Administration. 

(k) Federally related transaction 

regulations 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, or the National Credit 

Union Administration, pursuant to 

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19538 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

sections 1112, 1113, and 1114 of 

FIRREA Title XI, 12 U.S.C. 3341–3343. 

(l) Person has the meaning in 12 CFR 

1026.2(a)(22). 

(m) Principal dwelling means a 

residential structure that contains one to 

four units, whether or not that structure 

is attached to real property, that is also 

a consumer’s primary residence. The 

term includes an individual 

condominium unit, cooperative unit, 

mobile home, and trailer, if it is used as 

a residence. A vacation or other second 

home is not a principal dwelling. A 

consumer can have only one principal 

dwelling at a time. 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. 

(n) Secondary mortgage market 

participant means a guarantor or insurer 

of mortgage-backed securities, or an 

underwriter or issuer of mortgagebacked securities. Secondary mortgage 

market participant only includes an 

individual investor in a mortgagebacked security if that investor also 

serves in the capacity of a guarantor, 

insurer, underwriter, or issuer for the 

mortgage-backed security. 

(o) States mean the 50 States and the 

District of Columbia and the territories 

of Guam, Mariana Islands, Puerto Rico, 

and the U.S. Virgin Islands. 

(p) Uniform Standards of Professional 

Appraisal Practice (USPAP) means the 

appraisal standards promulgated by the 

Appraisal Standards Board of the 

Appraisal Foundation. 

§ 225.192 Appraiser panel. 

For purposes of determining whether, 

within a given year, an AMC oversees 

an appraiser panel of more than 15 

State-certified or State-licensed 

appraisers in a State or 25 or more Statecertified or State-licensed appraisers in 

two or more States under 

§ 225.191(d)(1)(iii)— 

(a) An appraiser is deemed part of the 

AMC’s appraiser panel as of the earliest 

date on which the AMC: 

(1) Affirms eligibility or acceptance of 

the appraiser for the AMC’s 

consideration for future appraisal 

assignments; or 

(2) Engages the appraiser to perform 

one or more appraisals on behalf of a 

creditor or secondary mortgage market 

principal. 

(b) An appraiser who is deemed part 

of the AMC’s appraiser panel pursuant 

to paragraph (a) of this section is 

deemed to remain on the panel until the 

date on which the AMC: 

(1) Sends written notice to the 

appraiser removing the appraiser from 

the appraiser panel, with an explanation 

of its action; or 

(2) Receives written notice from the 

appraiser asking to be removed from the 

appraiser panel or notice of the death or 

incapacity of the appraiser. 

(c) If an appraiser is removed from an 

AMC’s appraiser panel pursuant to 

paragraph (b) of this section, but the 

AMC subsequently re-admits or engages 

the appraiser at any time during the 

twelve months after the AMC’s removal, 

the removal will be deemed not to have 

occurred, and the appraiser will be 

deemed to have been part of the AMC’s 

appraiser panel without interruption. 

(d) The annual period for purposes of 

counting appraisers on an AMC’s 

appraiser panel may be the calendar 

year or a 12-month period established 

by law or rule of each State with which 

the AMC is required to register. 

§ 225.193 Appraisal management company 

registration. 

Each State electing to register AMCs 

pursuant to paragraph (b)(1) of this 

section must: 

(a) Establish and maintain within the 

State appraiser certifying and licensing 

agency a licensing program that is 

subject to the limitations set forth in 

§ 225.195 and with the legal authority 

and mechanisms to: 

(1) Review and approve or deny an 

AMC’s application for initial 

registration; 

(2) Review and renew or review and 

deny an AMC’s registration periodically; 

(3) Examine the books and records of 

an AMC operating in the State and 

require the AMC to submit reports, 

information, and documents; 

(4) Verify that the appraisers on the 

AMC’s appraiser list, network, panel, or 

roster hold valid State certifications or 

licenses, as applicable; 

(5) Conduct investigations of AMCs to 

assess potential violations of applicable 

appraisal-related laws, regulations, or 

orders; 

(6) Discipline, suspend, terminate, or 

deny renewal of the registration of an 

AMC that violates applicable appraisalrelated laws, regulations, or orders; and 

(7) Report an AMC’s violation of 

applicable appraisal-related laws, 

regulations, or orders, as well as 

disciplinary and enforcement actions 

and other relevant information about an 

AMC’s operations, to the Appraisal 

Subcommittee. 

(b) Impose requirements on AMCs 

that are not owned and controlled by an 

insured depository institution, an 

insured credit union, and not regulated 

by a Federal financial institutions 

regulatory agency to: 

(1) Register with and be subject to 

supervision by the State appraiser 

certifying and licensing agency; 

(2) Use only State-certified or Statelicensed appraisers for Federally related 

transactions in conformity with any 

Federally related transaction 

regulations; 

(3) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who is independent of the 

transaction and who has the requisite 

education, expertise, and experience 

necessary to competently complete the 

appraisal assignment for the particular 

market and property type; 

(4) Direct the appraiser to perform the 

assignment in accordance with USPAP; 

and 

(5) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC 

conducts its appraisal management 

services in accordance with the 

requirements of section 129E(a)–(i) of 

the Truth in Lending Act, 15 U.S.C. 

1639e(a)–(i), and regulations 

thereunder. 

§ 225.194 Requirements for Federally 

regulated appraisal management 

companies. 

(a) Requirements in providing 

services. To provide appraisal 

management services for a creditor or 

secondary mortgage market participant 

relating to a covered transaction, a 

Federally regulated AMC must comply 

with the requirements in 

§§ 225.193(b)(2) through (5). 

(b) Reporting information for the AMC 

National Registry. A Federally regulated 

AMC must: 

(1) Report to the State or States in 

which it operates the information 

required to be submitted by the State 

pursuant to the Appraisal 

Subcommittee’s policies regarding: 

(i) The determination of the AMC 

National Registry fee, including but not 

necessarily limited to a statement that 

the AMC is a Federally regulated AMC; 

and 

(ii) The collection of information 

related to the limitations set forth in 

§ 225.195. 

(2) Contact the Appraisal 

Subcommittee for alternative 

arrangements to submit the information 

described in paragraph (b)(1) of this 

section if a State in which a Federally 

regulated AMC operates has not 

established a process for accepting the 

information from Federally regulated 

AMCs. 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19539 

1 75 FR 77450 (December 10, 2010). 

§ 225.195 Registration limitations. 

(a) Appraiser certification or licensing 

of owners. An AMC shall not be 

registered by a State or included on the 

AMC National Registry if such AMC, in 

whole or in part, directly or indirectly, 

is owned by any person who has had an 

appraiser license or certificate refused, 

denied, cancelled, surrendered in lieu of 

revocation, or revoked in any State. 

(b) Good moral character of owners. 

An AMC shall not be registered by a 

State if any person that owns more than 

10 percent of the AMC— 

(1) Is determined by the State 

appraiser certifying and licensing 

agency not to have good moral 

character; or 

(2) Fails to submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. 

§ 225.196 Information to be presented to 

the Appraisal Subcommittee by 

participating States. 

Each State electing to register AMCs 

for purposes of permitting AMCs to 

provide appraisal management services 

relating to covered transactions in the 

State must submit to the Appraisal 

Subcommittee the information required 

to be submitted by Appraisal 

Subcommittee regulations or guidance 

concerning AMCs that operate in the 

State. 

Federal Deposit Insurance Corporation 

Authority and Issuance 

For the reasons set forth in the 

preamble, the FDIC proposes to amend 

12 CFR parts 323 and 390 as follows: 

PART 323—APPRAISALS 

■ 8. Revise the authority citation for part 

323 to read as follows: 

Authority: 12 U.S.C. 1818, 1819 

[‘‘Seventh’’ and ‘‘Tenth’’] and 3331 et seq. 

■ 9. Add a heading for new subpart A 

to read as follows: 

Subpart A—Appraisals Generally 

§§ 323.1 through 323.7— [Designated as 

subpart A] 

■ 10. Designate §§ 323.1 through 323.7 

under new subpart A. 

§§ 323.1, 323.3, 323.4, and 323.5— 

[Amended] 

■ 11. Amend Sections 323.1, 323.3, 

323.4, and 323.5 by removing ‘‘part’’ 

and adding ‘‘subpart’’ in its place in 

each instance in which it appears. 

■ 12. Add subpart B to part 323 to read 

as follows: 

Subpart B—Appraisal Management 

Company Minimum Requirements 

Sec. 

323.210 Authority, purpose, and scope. 

323.211 Definitions. 

323.212 Appraiser panel. 

323.213 Appraisal management company 

registration. 

323.214 Requirements for Federally 

regulated appraisal management 

companies. 

323.215 Registration limitations. 

323.216 Information to be presented to the 

Appraisal Subcommittee by participating 

States. 

§ 323.210 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

under 12 U.S.C. 1818, 1819 [‘‘Seventh’’ 

and ‘‘Tenth’’] and Title XI of the 

Financial Institutions Reform, Recovery, 

and Enforcement Act (FIRREA), as 

amended by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(the Dodd-Frank Act) (Pub. L. 111–203, 

124 Stat. 1376 (2010)), 12 U.S.C. 3331 et 

seq. 

(b) Purpose. The purpose of this 

subpart is to implement sections 1109, 

1117, 1121, and 1124 of FIRREA Title 

XI, 12 U.S.C. 3338, 3346, 3350, and 

3353. 

(c) Scope. This subpart applies to 

States and to appraisal management 

companies (AMCs) providing appraisal 

management services in connection 

with consumer credit transactions 

secured by a consumer’s principal 

dwelling or securitizations of those 

transactions. 

(d) Rule of construction. Nothing in 

this subpart should be construed to 

prevent a State from establishing 

requirements in addition to those in this 

subpart. In addition, nothing in this 

subpart should be construed to alter 

guidance in, and applicability of, the 

Interagency Appraisal and Evaluation 

Guidelines 1 or other relevant agency 

guidance that cautions banks, bank 

holding companies, Federal savings 

associations, state savings association, 

and credit unions, as applicable, that 

each such entity is accountable for 

overseeing the activities of third party 

service providers and ensuring that any 

services provided by a third party 

comply with applicable laws, 

regulations, and supervisory guidance 

applicable directly to the financial 

institution. 

§ 323.211 Definitions. 

For purposes of this subpart: 

(a) Affiliate has the meaning provided 

in 12 U.S.C. 1841. 

(b) AMC National Registry means the 

registry of State-registered appraisal 

management companies (AMCs) and 

Federally regulated AMCs maintained 

by the Appraisal Subcommittee. 

(c)(1) Appraisal management 

company (AMC) means a person that: 

(i) Provides appraisal management 

services to creditors or to secondary 

mortgage market participants, including 

affiliates; 

(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 year, oversees an 

appraiser panel of more than 15 Statecertified or State-licensed appraisers in 

a State or 25 or more State-certified or 

State-licensed appraisers in two or more 

States, as described in § 323.212; 

(2) An AMC does not include a 

department or division of an entity that 

provides appraisal management services 

only to that entity. 

(d) Appraisal management services 

means 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. 

(e) Appraiser panel means a network 

or panel of licensed or certified 

appraisers who are independent 

contractors to the AMC. 

(f) Appraisal Subcommittee means the 

Appraisal Subcommittee of the Federal 

Financial Institutions Examination 

Council. 

(g) Consumer credit has the meaning 

provided in 12 CFR 1026.2(a)(12). 

(h) Covered transaction means any 

consumer credit transaction secured by 

the consumer’s principal dwelling. 

(i) Creditor has the meaning provided 

in 12 CFR 1026.2(a)(17). 

(j) Federally regulated AMC means an 

AMC that is owned and controlled by an 

insured depository institution, as 

defined in 12 U.S.C. 1813, or an insured 

credit union, as defined in 12 U.S.C. 

1752, and that is regulated by the Office 

of the Comptroller of the Currency, the 

Board of Governors of the Federal 

Reserve System, the National Credit 

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19540 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

Union Administration, or the Federal 

Deposit Insurance Corporation. 

(k) Federally related transaction 

regulations 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, or the National Credit 

Union Administration, pursuant to 

sections 1112, 1113, and 1114 of 

FIRREA Title XI, 12 U.S.C. 3341–3343. 

(l) Person has the meaning in 12 CFR 

1026.2(a)(22). 

(m) Principal dwelling means a 

residential structure that contains one to 

four units, whether or not that structure 

is attached to real property, that is also 

a consumer’s primary residence. The 

term includes an individual 

condominium unit, cooperative unit, 

mobile home, and trailer, if it is used as 

a residence. A vacation or other second 

home is not a principal dwelling. A 

consumer can have only one principal 

dwelling at a time. 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. 

(n) Secondary mortgage market 

participant means a guarantor or insurer 

of mortgage-backed securities, or an 

underwriter or issuer of mortgagebacked securities. Secondary mortgage 

market participant only includes an 

individual investor in a mortgagebacked security if that investor also 

serves in the capacity of a guarantor, 

insurer, underwriter, or issuer for the 

mortgage-backed security. 

(o) States mean the 50 States and the 

District of Columbia and the territories 

of Guam, Mariana Islands, Puerto Rico, 

and the U.S. Virgin Islands. 

(p) Uniform Standards of Professional 

Appraisal Practice (USPAP) means the 

appraisal standards promulgated by the 

Appraisal Standards Board of the 

Appraisal Foundation. 

§ 323.212 Appraiser panel. 

For purposes of determining whether, 

within a given year, an AMC oversees 

an appraiser panel of more than 15 

State-certified or State-licensed 

appraisers in a State or 25 or more Statecertified or State-licensed appraisers in 

two or more States under 

§ 323.211(c)(1)(iii)— 

(a) An appraiser is deemed part of the 

AMC’s appraiser panel as of the earliest 

date on which the AMC: 

(1) Affirms eligibility or acceptance of 

the appraiser for the AMC’s 

consideration for future appraisal 

assignments; or 

(2) Engages the appraiser to perform 

one or more appraisals on behalf of a 

creditor or secondary mortgage market 

principal. 

(b) An appraiser who is deemed part 

of the AMC’s appraiser panel pursuant 

to paragraph (a) of this section is 

deemed to remain on the panel until the 

date on which the AMC: 

(1) Sends written notice to the 

appraiser removing the appraiser from 

the appraiser panel, with an explanation 

of its action; or 

(2) Receives written notice from the 

appraiser asking to be removed from the 

appraiser panel or notice of the death or 

incapacity of the appraiser. 

(c) If an appraiser is removed from an 

AMC’s appraiser panel pursuant to 

paragraph (b) of this section, but the 

AMC subsequently re-admits or engages 

the appraiser at any time during the 

twelve months after the AMC’s removal, 

the removal will be deemed not to have 

occurred, and the appraiser will be 

deemed to have been part of the AMC’s 

appraiser panel without interruption. 

(d) The annual period for purposes of 

counting appraisers on an AMC’s 

appraiser panel may be the calendar 

year or a 12-month period established 

by law or rule of each State with which 

the AMC is required to register. 

§ 323.213 Appraisal management company 

registration. 

Each State electing to register AMCs 

pursuant to paragraph (b)(1) of this 

section must: 

(a) Establish and maintain within the 

State appraiser certifying and licensing 

agency a licensing program that is 

subject to the limitations set forth in 

§ 323.215 and with the legal authority 

and mechanisms to: 

(1) Review and approve or deny an 

AMC’s application for initial 

registration; 

(2) Review and renew or review and 

deny an AMC’s registration periodically; 

(3) Examine the books and records of 

an AMC operating in the State and 

require the AMC to submit reports, 

information, and documents; 

(4) Verify that the appraisers on the 

AMC’s appraiser list, network, panel, or 

roster hold valid State certifications or 

licenses, as applicable; 

(5) Conduct investigations of AMCs to 

assess potential violations of applicable 

appraisal-related laws, regulations, or 

orders; 

(6) Discipline, suspend, terminate, or 

deny renewal of the registration of an 

AMC that violates applicable appraisalrelated laws, regulations, or orders; and 

(7) Report an AMC’s violation of 

applicable appraisal-related laws, 

regulations, or orders, as well as 

disciplinary and enforcement actions 

and other relevant information about an 

AMC’s operations, to the Appraisal 

Subcommittee. 

(b) Impose requirements on AMCs 

that are not owned and controlled by an 

insured depository institution or an 

insured credit union and not regulated 

by a Federal financial institution 

regulatory agency to: 

(1) Register with and be subject to 

supervision by the State appraiser 

certifying and licensing agency; 

(2) Use only State-certified or Statelicensed appraisers for Federally 

regulated transactions in conformity 

with any Federally related transaction 

regulations; 

(3) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who is independent of the 

transaction and who has the requisite 

education, expertise, and experience 

necessary to competently complete the 

appraisal assignment for the particular 

market and property type; 

(4) Direct the appraiser to perform the 

assignment in accordance with USPAP; 

and 

(5) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC 

conducts its appraisal management 

services in accordance with the 

requirements of section 129E(a)–(i) of 

the Truth in Lending Act, 15 U.S.C. 

1639e(a)–(i), and regulations 

thereunder. 

§ 323.214 Requirements for Federally 

regulated appraisal management 

companies. 

(a) Requirements in providing 

services. To provide appraisal 

management services for a creditor or 

secondary mortgage market participant 

relating to a covered transaction, a 

Federally regulated AMC must comply 

with the requirements in 

§§ 323.213(b)(2) through (5). 

(b) Reporting information for the AMC 

National Registry. A Federally regulated 

AMC must: 

(1) Report to the State or States in 

which it operates the information 

required to be submitted by the State 

pursuant to the Appraisal 

Subcommittee’s policies regarding: 

(i) The determination of the AMC 

National Registry fee, including but not 

necessarily limited to a statement that 

the AMC is a Federally regulated AMC; 

and 

(ii) The collection of information 

related to the limitations set forth in 

§ 323.215, as applicable. 

(2) Contact the Appraisal 

Subcommittee for alternative 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19541 

arrangements to submit the information 

described in paragraph (b)(1) of this 

section if a State in which a Federally 

regulated AMC operates has not 

established a process for accepting the 

information from Federally regulated 

AMCs. 

§ 323.215 Registration limitations. 

(a) Appraiser certification or licensing 

of owners. An AMC shall not be 

registered by a State or included on the 

AMC National Registry if such AMC, in 

whole or in part, directly or indirectly, 

is owned by any person who has had an 

appraiser license or certificate refused, 

denied, cancelled, surrendered in lieu of 

revocation, or revoked in any State. 

(b) Good moral character of owners. 

An AMC shall not be registered by a 

State if any person that owns more than 

10 percent of the AMC— 

(1) Is determined by the State 

appraiser certifying and licensing 

agency not to have good moral 

character; or 

(2) Fails to submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. 

§ 323.216 Information to be presented to 

the Appraisal Subcommittee by 

participating States. 

Each State electing to register AMCs 

for purposes of permitting AMCs to 

provide appraisal management services 

relating to covered transactions in the 

State must submit to the Appraisal 

Subcommittee the information required 

to be submitted by Appraisal 

Subcommittee regulations or guidance 

concerning AMCs that operate in the 

State. 

PART 390—REGULATIONS 

TRANSFERRED FROM THE OFFICE OF 

THRIFT SUPERVISION 

■ 13. The authority citation for part 390 

continues to read as follows: 

Authority: 12 U.S.C. 1819. 

Subpart A also issued under 12 U.S.C. 

1820. 

Subpart B also issued under 12 U.S.C. 

1818. 

Subpart C also issued under 5 U.S.C. 504; 

554–557; 12 U.S.C. 1464; 1467; 1468; 1817; 

1818; 1820; 1829; 3349, 4717; 15 U.S.C. 78l; 

78o–5; 78u–2; 28 U.S.C. 2461 note; 31 U.S.C. 

5321; 42 U.S.C. 4012a. 

Subpart D also issued under 12 U.S.C. 

1817; 1818; 1820; 15 U.S.C. 78l. 

Subpart E also issued under 12 U.S.C. 

1813; 1831m; 15 U.S.C. 78. 

Subpart F also issued under 5 U.S.C. 552; 

559; 12 U.S.C. 2901 et seq. 

Subpart G also issued under 12 U.S.C. 2810 

et seq., 2901 et seq.; 15 U.S.C. 1691; 42 U.S.C. 

1981, 1982, 3601–3619. 

Subpart I also issued under 12 U.S.C. 

1831x. 

Subpart J also issued under 12 U.S.C. 

1831p–1. 

Subpart K also issued under 12 U.S.C. 

1817; 1818; 15 U.S.C. 78c; 78l. 

Subpart L also issued under 12 U.S.C. 

1831p–1. 

Subpart M also issued under 12 U.S.C. 

1818. 

Subpart N also issued under 12 U.S.C. 

1821. 

Subpart O also issued under 12 U.S.C. 

1828. 

Subpart P also issued under 12 U.S.C. 

1470; 1831e; 1831n; 1831p–1; 3339. 

Subpart Q also issued under 12 U.S.C. 

1462; 1462a; 1463; 1464. 

Subpart R also issued under 12 U.S.C. 

1463; 1464; 1831m; 1831n; 1831p–1. 

Subpart S also issued under 12 U.S.C. 

1462; 1462a; 1463; 1464; 1468a; 1817; 1820; 

1828; 1831e; 1831o; 1831p–1; 1881–1884; 

3207; 3339; 15 U.S.C. 78b; 78l; 78m; 78n; 

78p; 78q; 78w; 31 U.S.C. 5318; 42 U.S.C. 

4106. 

Subpart T also issued under 12 U.S.C. 

1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 

78n; 78w. 

Subpart U also issued under 12 U.S.C. 

1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 

78n; 78p; 78w; 78d–1; 7241; 7242; 7243; 

7244; 7261; 7264; 7265. 

Subpart V also issued under 12 U.S.C. 

3201–3208. 

Subpart W also issued under 12 U.S.C. 

1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 

78n; 78p; 78w. 

Subpart Y also issued under 12 U.S.C. 

1831o. 

Subpart Z also issued under 12 U.S.C. 

1462; 1462a; 1463; 1464; 1828 (note). 

Subpart X—[Removed and Reserved] 

■ 14. Remove and reserve subpart X 

consisting of §§ 390.440 through 

390.447. 

Bureau of Consumer Financial 

Protection 

Authority and Issuance 

For the reasons stated above, the 

Bureau amends Regulation Z, 12 CFR 

part 1026, as follows: 

PART 1026—TRUTH IN LENDING 

(REGULATION Z) 

■ 14. The authority citation for part 

1026 is revised to read as follows: 

Authority: 12 U.S.C. 2601, 2603–2605, 

2607, 2609, 2617, 3353, 5511, 5512, 5532, 

5581; 15 U.S.C. 1601 et seq. 

Subpart A—General 

■ 15. Section 1026.1 is amended by 

revising paragraph (a) to read as follows: 

§ 1026.1 Authority, purpose, coverage, 

organization, enforcement, and liability. 

(a) Authority. This part, known as 

Regulation Z, is issued by the Bureau of 

Consumer Financial Protection to 

implement the Federal Truth in Lending 

Act, which is contained in title I of the 

Consumer Credit Protection Act, as 

amended (15 U.S.C. 1601 et seq.). This 

part also implements title XII, section 

1204 of the Competitive Equality 

Banking Act of 1987 (Public Law 100– 

86, 101 Stat. 552). Furthermore, this part 

implements certain provisions of the 

Real Estate Settlement Procedures Act of 

1974, as amended (12 U.S.C. 2601 et 

seq.). In addition, this part implements 

certain provisions of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act, as amended (12 U.S.C. 

3331 et seq.). The Bureau’s informationcollection requirements contained in 

this part have been approved by the 

Office of Management and Budget under 

the provisions of 44 U.S.C. 3501 et seq. 

and have been assigned OMB No. 3170– 

0015 (Truth in Lending). 

* * * * * 

Subpart E—Special Rules for Certain 

Home Mortgage Transactions 

■ 16. Section 1026.42 is amended by 

adding paragraph (h), as follows: 

§ 1026.42 Valuation independence. 

* * * * * 

(h) The Bureau issued a joint rule to 

implement the appraisal management 

company minimum requirements in the 

Financial Institutions Reform, Recovery, 

and Enforcement Act, as amended by 

section 1473 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act. See 12 CFR part 34. 

Federal Housing Finance Agency 

Authority and Issuance 

For the reasons set forth in the 

Supplementary Information, FHFA 

proposes to amend 12 CFR part 1222, as 

follows: 

PART 1222—APPRAISALS 

■ 17. The authority citation for part 

1222 is revised to read as follows: 

Authority: 12 U.S.C. 4501 et seq., 12 U.S.C. 

4526 and 15 U.S.C. 1639h. 

■ 18. Add subpart B to part 1222 to read 

as follows: 

Subpart B—Appraisal Management 

Company Minimum Requirements 

Sec. 

1222.20 Authority, purpose, and scope. 

1222.21 Definitions. 

1222.22 Appraiser panel. 

1222.23 Appraisal management company 

registration. 

1222.24 Requirements for Federally 

regulated appraisal management 

companies. 

1222.25 Registration limitations. 

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19542 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 

1 75 FR 77450 (December 10, 2010). 

1222.26 Information to be presented to the 

Appraisal Subcommittee by participating 

States. 

§ 1222.20 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

by the Federal Housing Finance Agency 

under 12 U.S.C. 4501 et seq., 12 U.S.C. 

4526, and Title XI of the Financial 

Institutions Reform, Recovery, and 

Enforcement Act (FIRREA), as amended 

by the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (the 

Dodd-Frank Act) (Pub. L. 111–203, 124 

Stat. 1376 (2010)), 12 U.S.C. 3331 et seq. 

(b) Purpose. The purpose of this 

subpart is to implement sections 1109, 

1117, 1121, and 1124 of FIRREA Title 

XI, 12 U.S.C. 3338, 3346, 3350, and 

3353. 

(c) Scope. This subpart applies to 

States and to appraisal management 

companies (AMCs) providing appraisal 

management services in connection 

with consumer credit transactions 

secured by a consumer’s principal 

dwelling or securitizations of those 

transactions. 

(d) Rule of construction. Nothing in 

this subpart should be construed to 

prevent a State from establishing 

requirements in addition to those in this 

subpart. In addition, nothing in this 

subpart should be construed to alter 

guidance in, and applicability of, the 

Interagency Appraisal and Evaluation 

Guidelines 1 or other relevant agency 

guidance that cautions banks, bank 

holding companies, Federal savings 

associations, state savings associations, 

and credit unions, as applicable, that 

each such entity is accountable for 

overseeing the activities of third party 

service providers and ensuring that any 

services provided by a third party 

comply with applicable laws, 

regulations, and supervisory guidance 

applicable directly to the financial 

institution. 

§ 1222.21 Definitions. 

For purposes of this subpart: 

(a) Affiliate has the meaning provided 

in 12 U.S.C. 1841. 

(b) AMC National Registry means the 

registry of State-registered appraisal 

management companies (AMCs) and 

Federally regulated AMCs maintained 

by the Appraisal Subcommittee. 

(c)(1) Appraisal management 

company (AMC) means a person that: 

(i) Provides appraisal management 

services to creditors or to secondary 

mortgage market participants, including 

affiliates; 

(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 year, oversees an 

appraiser panel of more than 15 Statecertified or State-licensed appraisers in 

a State or 25 or more State-certified or 

State-licensed appraisers in two or more 

States, as described in § 1222.22; 

(2) An AMC does not include a 

department or division of an entity that 

provides appraisal management services 

only to that entity. 

(d) Appraisal management services 

means 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. 

(e) Appraiser panel means a network 

or panel of licensed or certified 

appraisers who are independent 

contractors to the AMC. 

(f) Appraisal Subcommittee means the 

Appraisal Subcommittee of the Federal 

Financial Institutions Examination 

Council. 

(g) Consumer credit has the meaning 

provided in 12 CFR 1026.2(a)(12). 

(h) Covered transaction means any 

consumer credit transaction secured by 

the consumer’s principal dwelling. 

(i) Creditor has the meaning provided 

in 12 CFR 1026.2(a)(17). 

(j) Federally regulated AMC means an 

AMC that is owned and controlled by an 

insured depository institution, as 

defined in 12 U.S.C. 1813, or an insured 

credit union, as defined in 12 U.S.C. 

1752, and that is regulated by the Office 

of the Comptroller of the Currency, the 

Board of Governors of the Federal 

Reserve System, the National Credit 

Union Administration, or the Federal 

Deposit Insurance Corporation. 

(k) Federally related transaction 

regulations 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, or the National Credit 

Union Administration, pursuant to 

sections 1112, 1113, and 1114 of 

FIRREA Title XI, 12 U.S.C. 3341–3343. 

(l) Person has the meaning in 12 CFR 

1026.2(a)(22). 

(m) Principal dwelling means a 

residential structure that contains one to 

four units, whether or not that structure 

is attached to real property, that is also 

a consumer’s primary residence. The 

term includes an individual 

condominium unit, cooperative unit, 

mobile home, and trailer, if it is used as 

a residence. A vacation or other second 

home is not a principal dwelling. A 

consumer can have only one principal 

dwelling at a time. 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. 

(n) Secondary mortgage market 

participant means a guarantor or insurer 

of mortgage-backed securities, or an 

underwriter or issuer of mortgagebacked securities. Secondary mortgage 

market participant only includes an 

individual investor in a mortgagebacked security if that investor also 

serves in the capacity of a guarantor, 

insurer, underwriter, or issuer for the 

mortgage-backed security. 

(o) States mean the 50 States and the 

District of Columbia and the territories 

of Guam, Mariana Islands, Puerto Rico, 

and the U.S. Virgin Islands. 

(p) Uniform Standards of Professional 

Appraisal Practice (USPAP) means the 

appraisal standards promulgated by the 

Appraisal Standards Board of the 

Appraisal Foundation. 

§ 1222.22 Appraiser panel. 

For purposes of determining whether, 

within a given year, an AMC oversees 

an appraiser panel of more than 15 

State-certified or State-licensed 

appraisers in a State or 25 or more Statecertified or State-licensed appraisers in 

two or more States under 

§ 1222.21(c)(1)(iii)— 

(a) An appraiser is deemed part of the 

AMC’s appraiser panel as of the earliest 

date on which the AMC: 

(1) Affirms eligibility or acceptance of 

the appraiser for the AMC’s 

consideration for future appraisal 

assignments; or 

(2) Engages the appraiser to perform 

one or more appraisals on behalf of a 

creditor or secondary mortgage market 

principal. 

(b) An appraiser who is deemed part 

of the AMC’s appraiser panel pursuant 

to paragraph (a) of this section is 

deemed to remain on the panel until the 

date on which the AMC: 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Proposed Rules 19543 

(1) Sends written notice to the 

appraiser removing the appraiser from 

the appraiser panel, with an explanation 

of its action; or 

(2) Receives written notice from the 

appraiser asking to be removed from the 

appraiser panel or notice of the death or 

incapacity of the appraiser. 

(c) If an appraiser is removed from an 

AMC’s appraiser panel pursuant to 

paragraph (b) of this section, but the 

AMC subsequently re-admits or engages 

the appraiser at any time during the 

twelve months after the AMC’s removal, 

the removal will be deemed not to have 

occurred, and the appraiser will be 

deemed to have been part of the AMC’s 

appraiser panel without interruption. 

(d) The annual period for purposes of 

counting appraisers on an AMC’s 

appraiser panel may be the calendar 

year or a 12-month period established 

by law or rule of each State with which 

the AMC is required to register. 

§ 1222.23 Appraisal management company 

registration. 

Each State electing to register AMCs 

pursuant to paragraph (b)(1) of this 

section must: 

(a) Establish and maintain within the 

State appraiser certifying and licensing 

agency a licensing program that is 

subject to the limitations set forth in 

§ 1222.25 and with the legal authority 

and mechanisms to: 

(1) Review and approve or deny an 

AMC’s application for initial 

registration; 

(2) Review and renew or review and 

deny an AMC’s registration periodically; 

(3) Examine the books and records of 

an AMC operating in the State and 

require the AMC to submit reports, 

information, and documents; 

(4) Verify that the appraisers on the 

AMC’s appraiser list, network, panel, or 

roster hold valid State certifications or 

licenses, as applicable; 

(5) Conduct investigations of AMCs to 

assess potential violations of applicable 

appraisal-related laws, regulations, or 

orders; 

(6) Discipline, suspend, terminate, or 

deny renewal of the registration of an 

AMC that violates applicable appraisalrelated laws, regulations, or orders; and 

(7) Report an AMC’s violation of 

applicable appraisal-related laws, 

regulations, or orders, as well as 

disciplinary and enforcement actions 

and other relevant information about an 

AMC’s operations, to the Appraisal 

Subcommittee. 

(b) Impose requirements on AMCs 

that are not owned and controlled by an 

insured depository institution or by an 

insured credit union and not regulated 

by a Federal financial institutions 

regulatory agency to: 

(1) Register with and be subject to 

supervision by the State appraiser 

certifying and licensing agency; 

(2) Use only State-certified or Statelicensed appraisers for Federally related 

transactions in conformity with any 

Federally related transaction 

regulations; 

(3) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC, in 

engaging an appraiser, selects an 

appraiser who is independent of the 

transaction and who has the requisite 

education, expertise, and experience 

necessary to competently complete the 

appraisal assignment for the particular 

market and property type; 

(4) Direct the appraiser to perform the 

assignment in accordance with USPAP; 

and 

(5) Establish and comply with 

processes and controls reasonably 

designed to ensure that the AMC 

conducts its appraisal management 

services in accordance with the 

requirements of section 129E(a)–(i) of 

the Truth in Lending Act, 15 U.S.C. 

1639e(a)–(i), and regulations 

thereunder. 

§ 1222.24 Requirements for Federally 

regulated appraisal management 

companies. 

(a) Requirements in providing 

services. To provide appraisal 

management services for a creditor or 

secondary mortgage market participant 

relating to a covered transaction, a 

Federally regulated AMC must comply 

with the requirements in 

§§ 1222.23(b)(2) through (5). 

(b) Reporting information for the AMC 

National Registry. A Federally regulated 

AMC must: 

(1) Report to the State or States in 

which it operates the information 

required to be submitted by the State 

pursuant to the Appraisal 

Subcommittee’s policies regarding: 

(i) The determination of the AMC 

National Registry fee, including but not 

necessarily limited to a statement that 

the AMC is a Federally regulated AMC; 

and 

(ii) The collection of information 

related to the limitations set forth in 

§ 1222.25, as applicable. 

(2) Contact the Appraisal 

Subcommittee for alternative 

arrangements to submit the information 

described in paragraph (b)(1) of this 

section if a State in which a Federally 

regulated AMC operates has not 

established a process for accepting the 

information from Federally regulated 

AMCs. 

§ 1222.25 Registration limitations. 

(a) Appraiser certification or licensing 

of owners. An AMC shall not be 

registered by a State or included on the 

AMC National Registry if such AMC, in 

whole or in part, directly or indirectly, 

is owned by any person who has had an 

appraiser license or certificate refused, 

denied, cancelled, surrendered in lieu of 

revocation, or revoked in any State. 

(b) Good moral character of owners. 

An AMC shall not be registered by a 

State if any person that owns more than 

10 percent of the AMC— 

(1) Is determined by the State 

appraiser certifying and licensing 

agency not to have good moral 

character; or 

(2) Fails to submit to a background 

investigation carried out by the State 

appraiser certifying and licensing 

agency. 

§ 1222.26 Information to be presented to 

the Appraisal Subcommittee by 

participating States. 

Each State electing to register AMCs 

for purposes of permitting AMCs to 

provide appraisal management services 

relating to covered transactions in the 

State must submit to the Appraisal 

Subcommittee the information required 

to be submitted by Appraisal 

Subcommittee regulations or guidance 

concerning AMCs that operate in the 

State. 

Dated: March 20, 2014. 

Thomas J. Curry, 

Comptroller of the Currency. 

Dated: March 19, 2014. 

Robert deV. Frierson, 

Secretary of the Board. 

Dated at Washington, DC, this 19th day of 

March, 2014. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

Dated: March 11, 2014. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

Dated: March 1, 2014. 

Melvin L. Watt, 

Director, Federal Housing Finance Agency. 

In consultation with: 

By the National Credit Union 

Administration Board on March 20, 2014. 

Gerard Poliquin, 

Secretary of the Board. 

[FR Doc. 2014–06860 Filed 4–8–14; 8:45 am] 

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; 

7535–01–P; 4810–AM–P; 8070–01–P 

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