1430 Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Rules and Regulations 

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. 

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 stateadministered 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 Statelicensed 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-forprofit, private educational organization. 

Title XI does not require Statelicensed 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 Statecertified 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 phasein 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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Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Rules and Regulations 1431 

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 FHAspecific 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 

§ 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 FHAspecific 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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1432 Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Rules and Regulations 

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. 

■ Accordingly, for the reasons described 

in the preamble, HUD amends 24 CFR 

part 200, as follows: 

PART 200—INTRODUCTION TO FHA 

PROGRAMS 

■ 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). 

■ 2. Revise § 200.202 to read as follows: 

§ 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. 

■ 3. Revise § 200.204(d) to read as 

follows: 

§ 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 

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