[Federal Register Volume 73, Number 5 (Tuesday, January 8, 2008)]
[Rules and Regulations]
[Pages 1430-1432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-8]



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Part III





Department of Housing and Urban Development





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24 CFR Part 200



FHA Appraiser Roster Requirements; Final Rule

Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Rules 
and Regulations

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 200

[Docket No. FR-5112-F-01]
RIN 2502-AI53


FHA Appraiser Roster Requirements

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner; HUD.

ACTION: Final rule.

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SUMMARY: This final rule explicitly conforms the eligibility 
requirements for applicants to the Federal Housing Administration (FHA) 
Appraiser Roster to longstanding HUD practices, as well as to existing 
nationwide industry practice. Only appraisers on the roster may perform 
required appraisals of properties that are to serve as security for 
FHA-insured single-family mortgages. Among other requirements, the 
current regulations require that an applicant must be a state-licensed 
or state-certified appraiser and pass a HUD examination on FHA 
appraisal methods and reporting. This final rule codifies HUD's 
longstanding practice and the nationwide practice that such 
certification or licensing comply with national criteria for education, 
experience, and passage of a state-administered examination. This final 
rule also eliminates the requirement for applicants to pass a HUD test 
on FHA appraisal methods and reporting, because the test has become 
duplicative of the national examination requirements for state 
licensure and certification and, therefore, unnecessary.

DATES: Effective Date: February 7, 2008

FOR FURTHER INFORMATION CONTACT: Peter Gillispie, Home Valuation Policy 
Division, Office of Housing, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 9270, Washington, DC 20410-
8000; telephone number (202) 708-2121, extension 3368 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal 
Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

A. The FHA Appraiser Roster

    To qualify for FHA insurance for a single-family mortgage, a lender 
must obtain an appraisal of the property that is to be the security for 
the loan. Only an appraiser listed on HUD's FHA Appraiser Roster may 
perform the appraisal. Under HUD's current regulation found in 24 CFR 
200.202(b), an applicant who wishes to be included on the FHA Appraiser 
Roster must be a State-licensed or State-certified appraiser, must pass 
a HUD test on FHA appraisal methods and reporting, and must not be 
listed on the General Services Administration's Suspension and 
Debarment list, HUD's Limited Denial of Participation List, or HUD's 
Credit Alert Interactive Voice Response System. HUD's regulations for 
the Appraiser Roster are codified in subpart G of 24 CFR part 200.

B. National Appraiser Qualifications Board Criteria

    Title XI of the Financial Institutions Recovery, Reform, and 
Enforcement Act of 1989 (Title XI) (12 U.S.C. 3331 et seq.) requires 
appraisals of real estate in all federally related transactions to be 
performed by State-certified or State-licensed appraisers. Only State-
certified appraisers may perform appraisals for high-value and complex 
federally related transactions. Appraisals of other federally related 
transactions may be performed by State-licensed appraisers. To be 
State-certified for purposes of Title XI, an appraiser must have 
credentials that meet the national qualification criteria established 
by the Appraiser Qualification Board (AQB) of the Appraisal Foundation, 
a not-for-profit, private educational organization.
    Title XI does not require State-licensed appraisers to meet AQB 
qualification criteria, and regulations promulgated under Title XI 
exclude federally insured transactions such as FHA-insured mortgages 
from the classes of transactions subject to Title XI's appraisal 
requirements. However, in addition to establishing the statutorily 
required qualification criteria for State-certified appraisers, the AQB 
has published model qualification criteria for State-licensed 
appraisers and other classifications of appraisers, and States and 
Federal agencies may require compliance with these criteria.
    The AQB criteria for State-certified and State-licensed appraisers 
require candidates to have taken a minimum number of hours of 
coursework, to have a minimum number of hours of appraisal experience, 
and to pass an AQB-endorsed, State-administered examination. In 
addition, appraisers must comply with continuing education requirements 
in order to renew their credentials. The AQB has revised the criteria 
twice, and the most recent revision will increase coursework 
requirements and require completion of a new National Uniform 
Examination beginning on January 1, 2008. After this revision takes 
effect, applicants for the State-licensed classification will be 
required to complete 150 hours of coursework in a required core 
curriculum, accumulate 2,000 hours of acceptable appraisal experience, 
and pass the new National Uniform Examination.

C. HUD's 2003 Rulemaking on Compliance with AQB Criteria for Placement 
on Appraiser Roster

    On November 30, 2001, at 66 FR 60128, HUD published a proposed rule 
to require appraisers listed on the Appraiser Roster to be State-
licensed or State-certified with credentials that meet the applicable 
AQB criteria in effect when the credentials were issued. The proposed 
rule stated that even if a State had ``grandfathered in'' appraisers 
who had been licensed before establishment of the AQB criteria, such 
appraisers could not be added to the Appraiser Roster if their 
credentials did not meet the applicable AQB criteria. HUD subsequently 
received public comments expressing concern about persons who were 
already listed on the Appraiser Roster but whose credentials had been 
issued by States prior to the adoption of the AQB criteria.
    In response to these comments, HUD provided in the final rule 
published on May 16, 2003 (68 FR 26946), for a 12-month phase-in period 
following the effective date of the final rule, by the end of which 
appraisers already on the FHA Appraiser Roster would have to comply 
with the AQB licensing/certification criteria. In addition, HUD stated 
that it would later publish in the Federal Register the date by which 
the requirement to comply with AQB criteria would have to be met and on 
which would begin the 12-month phase-in period that would be allowed to 
meet this requirement.

II. This Final Rule

    This final rule, which follows publication of the May 16, 2003, 
final rule, codifies the AQB requirements in HUD's FHA Appraiser Roster 
regulations. Specifically, this final rule requires that an appraiser, 
in order to be eligible for placement on the FHA Appraiser Roster, must 
have credentials that met the applicable AQB criteria in effect when 
the credentials were issued. Appraisers that were State-licensed and 
State-certified in accordance with earlier versions of the AQB criteria 
do not lose their eligibility to be listed on the FHA Appraiser Roster 
merely because the AQB subsequently establishes more stringent 
education, experience, or examination criteria.

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    HUD recently undertook a review of the appraisers listed on the FHA 
Appraiser Roster and determined that the credentials of all currently 
listed appraisers comply with the applicable AQB criteria. As a result, 
the provisions in the May 16, 2003, final rule for a 12-month phase-in 
period are no longer necessary. HUD has also determined that no State 
in fact ``grandfathered in'' appraisers who had been licensed prior to 
establishment of the AQB criteria, a concern at the time of the 
publication of the May 16, 2003, final rule. Consequently, today's 
final rule does not contain these unnecessary provisions.
    This final rule also eliminates the requirement for applicants to 
pass a HUD test on FHA appraisal methods and reporting. FHA has 
undertaken a series of initiatives to align its practices with those of 
the conventional lending industry, including streamlining and updating 
its appraisal reporting procedures and policies. By adopting and 
requiring the use of updated appraisal reporting forms and relaxing its 
repair and inspection requirements for existing properties, FHA has 
ensured that an appraisal of a property that is to be the security for 
FHA-insured financing is not materially different from an appraisal of 
the same property performed for conventional financing. As a result, 
the knowledge and skills needed to perform an FHA appraisal do not 
differ from those needed to perform an appraisal for a conventional 
mortgage. Therefore, HUD has determined that a separate test on FHA-
specific appraisal methods and reporting is no longer necessary.
    Furthermore, HUD has concluded that passage of the State-
administered examination required under the AQB qualification criteria 
is an acceptable indicator of an applicant's competence in and 
knowledge of real estate appraisal methodology. Under the current AQB 
criteria, applicants must pass the AQB-endorsed uniform examination, or 
its equivalent, for the level of credentials they are seeking. 
Examinations for all credentials are comprehensive and cover 15 topics, 
including economic, legal, and ethical principles and various 
approaches to property valuation. Practice questions test applicants' 
ability to apply the knowledge and competency they gained through 
required coursework and experience to appraise representative 
properties based on available data. In light of the rigorous and 
comprehensive nature of the AQB-required examination, HUD has 
determined that the FHA test provides no additional assurance that 
appraisers listed on the FHA Appraiser Roster are able to provide 
accurate appraisals of properties that are to be the security for FHA-
insured mortgages.

III. Justification for Final Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with HUD's regulations on rulemaking 
at 24 CFR part 10. Part 10, however, provides in Sec.  10.1 for 
exceptions from that general rule where HUD finds good cause to omit 
advance notice and public participation. The good cause requirement is 
satisfied when the prior public procedure is ``impracticable, 
unnecessary, or contrary to the public interest.''
    HUD finds that good cause exists to publish this rule for effect 
without soliciting further public comment, on the basis that additional 
public procedure is unnecessary. The purpose of this final rule is to 
formally codify the requirement that appraisers who are listed on the 
FHA Appraiser Roster have credentials that comply with AQB criteria, a 
practice already in place. On November 30, 2001, HUD published for 
public comment a proposed rule that included compliance with the AQB 
criteria. On May 16, 2003, HUD published this requirement in a final 
rule that considered the public comments on the earlier proposed rule.
    This final rule updates the May 16, 2003, final rule by removing 
provisions that have since become unnecessary or are inapplicable. HUD 
has determined that because the credentials of all appraisers presently 
listed on the FHA Appraiser Roster comply with the applicable AQB 
criteria, the 12-month phase-in period is unnecessary for any currently 
listed person on the roster. HUD has also determined that no states 
have ``grandfathered in'' any previously certified or licensed 
appraisers from having to comply with the AQB criteria when the 
criteria were first established. As a result, the provision that 
clarified that such appraisers would nonetheless have to comply with 
the AQB criteria is also inapplicable to any prospective applicant to 
the FHA Appraiser Roster. Further, since FHA appraisal requirements now 
conform to those of conventional mortgages, it is no longer necessary 
to test FHA Appraiser Roster applicants for knowledge of FHA-specific 
requirements. HUD has also concluded that the examinations required by 
the AQB criteria are acceptable indicators of applicants' knowledge and 
competency to perform accurate appraisals, including those for FHA-
insured transactions.
    Since HUD has already received and responded to public comments on 
the requirement for compliance with AQB criteria, and since elimination 
of inapplicable provisions does not affect the rights or interests of 
any members of the public, HUD finds that additional public procedure 
is unnecessary.

IV. Findings and Certifications

Information Collection Requirements

    The information collection requirements contained in this document 
have been approved by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned 
OMB control number 2502-0538. In accordance with the Paperwork 
Reduction Act, HUD may not conduct or sponsor, and a person is not 
required to respond to, a collection of information, unless the 
collection displays a currently valid OMB control number.

Environmental Impact

    This final rule does not direct, provide for assistance, or direct 
or provide loan and mortgage insurance for, or otherwise govern or 
regulate, real property acquisition, disposition, leasing, 
rehabilitation, alteration, demolition, or new construction, nor does 
it establish, revise, or provide for standards for construction or 
construction materials, manufactured housing, or occupancy. Although 
this rule establishes qualifications for persons who may perform 
required appraisals for insured mortgages, it does not have any impact 
on when insurance may or may not be provided. Accordingly, under 24 CFR 
50.19(c)(1), this final rule is categorically excluded from the 
requirements of the National Environmental Policy Act (42 U.S.C. 4321 
et seq.).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis 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. 
Because through this rule, the Department only explicitly conforms its 
requirements to existing nationwide industry practice, the Department 
does not anticipate that this change will result in any, much less a 
significant, economic impact on a substantial number of small agencies. 
The requirements stated in the rule are already being followed. 
Accordingly, the undersigned certifies that this rule

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will not have a significant economic impact on a substantial number of 
small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule will not have federalism 
implications and would not impose substantial direct compliance costs 
on State and local governments or preempt State law within the meaning 
of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments, and on the private sector. This rule will not 
impose any Federal mandates on any State, local, or tribal governments, 
or on the private sector, within the meaning of the UMRA.

List of Subjects in 24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Home improvement, Housing standards, 
Incorporation by reference, Lead poisoning, Loan programs--housing and 
community development, Minimum property standards, Mortgage insurance, 
Organization and functions (Government agencies), Penalties, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

0
Accordingly, for the reasons described in the preamble, HUD amends 24 
CFR part 200, as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

0
1. The authority citation for 24 CFR part 200 continues to read as 
follows:

    Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).

0
2. Revise Sec.  200.202 to read as follows:


Sec.  200.202  How do I apply for placement on the Appraiser Roster?

    (a) Application. To apply for placement on the Appraiser Roster, 
you must submit an application to HUD.
    (b) Eligibility. To be eligible for placement on the Appraiser 
Roster:
    (1) You must be a state-licensed or state-certified appraiser with 
credentials that complied with the applicable licensing or 
certification criteria established by the Appraiser Qualification Board 
(AQB) of the Appraisal Foundation and in effect at the time the license 
or certification was awarded by the issuing jurisdiction; and
    (2) You must not be listed on:
    (i) The General Services Administration's Suspension and Debarment 
List;
    (ii) HUD's Limited Denial of Participation List; or
    (iii) HUD's Credit Alert Interactive Voice Response System.
0
3. Revise Sec.  200.204(d) to read as follows:


Sec.  200.204  What actions may HUD take against unsatisfactory 
appraisers on the Appraiser Roster?

* * * * *
    (d) Education requirements. Where there is evidence that an 
appraiser is deficient in FHA appraisal requirements, HUD may require 
an appraiser to undergo professional training.
* * * * *

    Dated: December 20, 2007.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 08-8 Filed 1-7-08; 8:45 am]
BILLING CODE 4210-67-P