[Federal Register Volume 82, Number 181 (Wednesday, September 20, 2017)]
[Notices]
[Pages 43966-43983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19998]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS17-06]


Appraisal Subcommittee; Proposed Revised Policy Statements

AGENCY: Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council.

ACTION: Proposed Revised Policy Statements.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council requests public comment on a proposal 
to revise ASC Policy Statements (proposed Policy Statements). The 
proposed Policy Statements provide guidance to ensure State appraiser 
regulatory programs comply with Title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, as amended, and the 
rules promulgated thereunder. The proposed Policy Statements would 
supersede the current ASC Policy Statements. The ASC previously 
published the Proposed Revised Policy Statements on January 10, 2017, 
under Docket Number AS17-01. The comment period was scheduled to close 
on April 10, 2017. The ASC suspended the comment period in response to 
the White House Chief of Staff Memorandum titled Regulatory Freeze 
Pending Review, signed on January 20, 2017, pending review by the 
Office of Management and Budget (OMB). Technical edits for 
clarification have been made to the proposed Policy Statements since 
the initial publication, which are addressed below in Supplementary 
Information, section III, Statement-by-Statement.

DATES: Comments must be received on or before November 20, 2017.

ADDRESSES: Commenters are encouraged to submit comments by the Federal 
eRulemaking Portal or email, if possible. You may submit comments, 
identified by Docket Number AS17-06, by any of the following methods:
    <bullet> Federal eRulemaking Portal: https://www.Regulations.gov. 
Follow the instructions for submitting 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.
    <bullet> E-Mail: <a href="/cdn-cgi/l/email-protection#1c6b797e717d6f68796e5c7d6f7f327b736a"><span class="__cf_email__" data-cfemail="6b1c0e09060a181f0e192b0a1808450c041d">[email protected]</span></a>. Include the docket number in 
the subject line of the message.
    <bullet> Fax: (202) 289-4101. Include docket number on fax cover 
sheet.
    <bullet> Mail: Address to Appraisal Subcommittee, Attn: Lori 
Schuster, Management and Program Analyst, 1401 H Street NW., Suite 760, 
Washington, DC 20005.
    <bullet> Hand Delivery/Courier: 1401 H Street NW., Suite 760, 
Washington, DC 20005.
    In general, the ASC will enter all comments received into the 
docket and publish those comments on the Federal eRulemaking 
(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. At the close of 
the comment period, all public comments will also be made available on 
the ASC's Web site at https://www.asc.gov (follow link in ``What's 
New'') as submitted, unless modified for technical reasons.
    You may review comments by any of the following methods:
    <bullet> Viewing Comments Electronically: Go to https://www.Regulations.gov. Enter ``Docket ID AS17-06'' in the Search box and 
click ``Search.'' 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.
    <bullet> Viewing Comments Personally: You may personally inspect 
comments at the ASC office, 1401 H Street NW., Suite 760, Washington, 
DC 20005. To make an appointment, please call Lori Schuster at (202) 
595-7578.

FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at 
(202) 595-7575, or Alice M. Ritter, General Counsel, at (202) 595-7577, 
Appraisal Subcommittee, 1401 H Street NW., Suite 760, Washington, DC 
20005.

SUPPLEMENTARY INFORMATION: 

I. Background

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (Title XI), established the ASC.\1\ 
The purpose of Title XI is to provide protection of Federal financial 
and public policy interests by upholding Title XI requirements for 
appraisals performed for federally related transactions.\2\ Pursuant to 
Title XI, one of the ASC's core functions is to monitor the 
requirements established by the States \3\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions. This is accomplished through 
periodic ASC Compliance Reviews of each State appraiser regulatory 
program (Appraiser Program) to determine compliance or lack thereof 
with Title XI, and to assess implementation of minimum requirements for 
credentialing of appraisers as adopted by the Appraiser Qualifications 
Board (The Real Property Appraiser Qualification Criteria or AQB 
Criteria).
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    \1\ The ASC Board is comprised of seven members. Five members 
are designated by the heads of the FFIEC agencies (Board of 
Governors of the Federal Reserve System [Board], Consumer Financial 
Protection Bureau [CFPB], Federal Deposit Insurance Corporation 
[FDIC], Office of the Comptroller of the Currency [OCC], and 
National Credit Union Administration [NCUA]). The other two members 
are designated by the heads of the Department of Housing and Urban 
Development (HUD) and the Federal Housing Finance Agency (FHFA).
    \2\ Refers to any real estate related financial transaction 
which: (a) A federal financial institutions regulatory agency 
engages in, contracts for, or regulates; and (b) requires the 
services of an appraiser. (Title XI Sec.  1121(4), 12 U.S.C. 3350.)
    \3\ The 50 States, the District of Columbia, and four 
Territories, which are the Commonwealth of Puerto Rico, Commonwealth 
of the Northern Mariana Islands, Guam, and United States Virgin 
Islands.
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    Title XI as amended by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (Dodd-Frank Act) \4\ expanded the ASC's 
core functions to include monitoring of the requirements established by 
States that elect to register and supervise the operations and 
activities of appraisal management companies \5\ (AMCs). States 
electing to register and supervise AMCs must implement minimum 
requirements in accordance with the AMC Rule.\6\ As a result, States 
with an

[[Page 43967]]

AMC regulatory program (AMC Program) will be evaluated during the ASC's 
Compliance Review to determine compliance or lack thereof with Title 
XI, and to assess implementation of the minimum requirements for State 
registration and supervision of AMCs as established by the AMC Rule. 
The amendments to Title XI by the Dodd-Frank Act also allow States with 
an AMC Program to add information about AMCs in their State to the 
National Registry of AMCs (AMC Registry). The proposed Policy 
Statements include guidance to the States regarding how AMC Programs 
will be evaluated during ASC Compliance Reviews.
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    \4\ Public Law 111-203, 124 Stat. 1376.
    \5\ Title XI Sec.  1103(a)(1)(B), 12 U.S.C. 3332.
    \6\ The Dodd-Frank Act added section 1124 to Title XI, Appraisal 
Management Company Minimum Requirements, which required the OCC, 
Board, FDIC, NCUA, CFPB, and FHFA to establish, by rule, minimum 
requirements for the registration and supervision of AMCs by States 
that elect to register and supervise AMCs pursuant to Title XI and 
the rules promulgated thereunder. (Title XI Sec.  1124(a), 12 U.S.C. 
3353(a).) Those rules were finalized and published on June 9, 2015, 
at 80 Federal Register 32658 with an effective date of August 10, 
2015. (12 CFR 34.210-34.216; 12 CFR 225.190-225.196; 12 CFR 323.8-
323.14; 12 CFR 1222.20-1222.26)
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II. Overview of Proposed Policy Statements

    The ASC is issuing these proposed Policy Statements \7\ in three 
parts to provide States with the necessary information to maintain 
their Appraiser Programs and AMC Programs in compliance with Title XI 
and the rules promulgated thereunder:
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    \7\ These Policy Statements, adopted [date to be inserted when 
final], supersede all previous Policy Statements adopted by the ASC.
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    [rtarr8] Part A, Appraiser Program--Policy Statements 1 through 7 
correspond with the categories that are: (a) Evaluated during the 
Appraiser Program Compliance Review; and (b) included in the ASC's 
Compliance Review Report of the Appraiser Program.
    [rtarr8] Part B, AMC Program--Policy Statements 8 through 11 
correspond with the categories that are: (a) Evaluated during the AMC 
Program Compliance Review; and (b) included in the ASC's Compliance 
Review Report of the AMC Program.
    [rtarr8] Part C, Interim Sanctions--Policy Statement 12 sets forth 
required procedures in the event that interim sanctions are imposed 
against a State by the ASC for non-compliance in either the Appraiser 
Program or the AMC Program.
    The proposal also includes two appendices:
    1. Appendix A provides an overview of the Compliance Review 
process; and
    2. Appendix B provides a glossary of terms.

III. Statement-by-Statement

    The following provides a section by section highlight of changes 
presented in the proposed Policy Statements.

Introduction and Purpose

    The ASC proposes to expand the introduction to include the 
monitoring of States that elect to register and supervise the 
operations and activities of AMCs, and to include an explanation of the 
proposed Policy Statements' three parts and appendices.

Part A: Appraiser Program

Policy Statement 1: Statutes, Regulations, Policies and Procedures 
Governing State Appraiser Programs
    The ASC proposes to modify Policy Statement 1 to include a 
definition of trainee appraiser to better reflect how changes to Title 
XI affect Appraiser Programs with trainee requirements.
Policy Statement 2: Temporary Practice
    The ASC proposes to modify Policy Statement 2 to clarify 
requirements for temporary practice and includes requirements to track 
temporary practice permits and maintain documentation.
Policy Statement 3: National Registry of Appraisers
    The ASC proposes to modify Policy Statement 3 to clarify 
requirements regarding States' submission of registry fees and 
eligibility of appraisers for the Appraiser Registry.
    Technical edits for clarification were made to Policy Statement 3 
since the initial publication. The Summary of Requirements include the 
5-day reporting requirement for disciplinary action consistent with the 
body of the Policy Statement, and clarify the requirement for States to 
adopt and implement a policy to protect right of access to the 
Appraiser Registry.
Policy Statement 4: Application Process
    The ASC proposes to modify Policy Statement 4 to include additional 
guidance to States implementing AQB Criteria regarding the background 
of applicants for credentials and requires States to document applicant 
files with evidence supporting decisions made regarding individual 
appraisers. Policy Statement 4 as proposed also provides additional 
guidance on requirements for States to validate renewal requirements 
for appraisers and provides parameters for auditing education-related 
affidavits. Finally, Policy Statement 4 as proposed clarifies the 
requirement that States engage analysts who are knowledgeable about the 
Uniform Standards of Professional Appraisal Practice (USPAP) and 
document how the analysts are qualified.
    Technical edits for clarification were made to Policy Statement 4 
since the initial publication. The section titled Processing of 
Applications refers to ``documentation'' required rather than 
``files.'' In the section titled ``Validation Procedures, Objectives 
and Requirements,'' the subsection ``Selection of Work Product'' is 
renamed ``Experience Hours Validation'' to more accurately reflect the 
content of the subsection, and compliance with USPAP is moved to the 
following subsection titled ``USPAP Compliance''; the subsection 
``Determination of Experience Time Periods'' no longer restates AQB 
Criteria, but rather requires that time periods conform with AQB 
Criteria; and ``Supporting Documentation'' clarifies documentation 
required. The Summary of Requirements were modified to conform with 
these technical edits.
Policy Statement 5: Reciprocity
    The ASC proposes to modify Policy Statement 5 to include a 
requirement that States obtain and maintain sufficient relevant 
documentation pertaining to an application for issuance of a credential 
by reciprocity.
Policy Statement 6: Education
    The ASC proposes to modify Policy Statement 6 to clarify that 
States may not continue to accept AQB approved courses after the AQB's 
expiration date unless the course content is reviewed and approved by 
the State.
Policy Statement 7: State Agency Enforcement
    The ASC proposes to modify Policy Statement 7 to clarify the 
requirement that States consider USPAP violations when investigating a 
complaint whether or not USPAP violations were the basis for the 
complaint.
    Technical edits for clarification were made to Policy Statement 7 
since the initial publication. A footnote was added to clarify that the 
one-year period for resolution of complaints is not intended to have 
the impact of a statute of limitation.

Part B: AMC Program

    As proposed, Policy Statements 8, 9 & 10 duplicate the provisions 
of Policy Statements 1, 3 & 7 to every extent possible. The standard 
language is intentional and will create better understanding of the 
Policy Statements by the States as they will be able to anticipate how 
to comply based on their understanding of the Policy Statements they 
have been following. Differences are discussed below.
Policy Statement 8: Statutes, Regulations, Policies and Procedures 
Governing State AMC Programs
    The ASC proposes a new Policy Statement 8 to reflect the statutory 
provision that States are not required to establish an AMC Program, but 
clarify for those States that establish AMC

[[Page 43968]]

Programs the ASC oversight during ASC Compliance Reviews. As proposed, 
Policy Statement 8 reiterates that States with an AMC Program must: (1) 
Establish and maintain an AMC Program with the legal authority and 
mechanisms consistent with the AMC Rule; (2) impose requirements on 
AMCs consistent with the AMC Rule; and (3) enforce and document 
ownership limitations for State-registered AMCs. As proposed, Policy 
Statement 8 informs States that while they may have a more expansive 
definition of an AMC in their State statute, only AMCs that meet the 
federal definition in Title XI may be included on the AMC Registry.
Policy Statement 9: National Registry of AMCs (AMC Registry)
    The ASC proposes a new Policy Statement 9 to clarify requirements 
for States with an AMC Program to maintain the AMC Registry in the same 
way they maintain the Appraiser Registry.
    Technical edits for clarification were made to Policy Statement 9 
since the initial publication. The Summary of Requirements includes the 
requirement for States to adopt and implement a policy to protect right 
of access to the AMC Registry.
Policy Statement 10: State Agency Enforcement
    The ASC proposes a new Policy Statement 10 to clarify requirements 
for States' AMC enforcement programs in those States with an AMC 
Program.
Policy Statement 11: Statutory Implementation Period
    The ASC proposes a new Policy Statement 11 to clarify the statutory 
implementation period and any extensions that may be granted.

Part C: Interim Sanctions

Policy Statement 12: Interim Sanctions
    The ASC proposes a new Policy Statement 12 which modifies existing 
Policy Statement 8 to clarify interim sanctions which may be imposed on 
State Programs when those programs fail to be effective. The proposed 
procedures include due process provisions and rules of evidence, and 
would establish timeliness for proceedings.

IV. Request for Comment

    The ASC seeks comment on all aspects of the proposed Policy 
Statements. In addition, the ASC requests comments on whether the 
proposed Policy Statements provide State Programs with the necessary 
information to understand the ASC's expectations during a Compliance 
Review.
    The text of the proposed Policy Statements is as follows:

Contents
Introduction and Purpose
Part A: Appraiser Program
Policy Statement 1
Statutes, Regulations, Policies and Procedures Governing State 
Appraiser Programs
    A. State Regulatory Structure
    B. Funding and Staffing
    C. Minimum Criteria
    D. Federally Recognized Appraiser Classifications
    E. Non-Federally Recognized Credentials
    F. Appraisal Standards
    G. Exemptions
    H. ASC Staff Attendance at State Board Meetings
    I. Summary of Requirements
Policy Statement 2
Temporary Practice
    A. Requirement for Temporary Practice
    B. Excessive Fees or Burdensome Requirements
    C. Summary of Requirements
Policy Statement 3
National Registry of Appraisers
    A. Requirements for the National Registry of Appraisers
    B. Registry Fee and Invoicing Policies
    C. Access to Appraiser Registry Data
    D. Information Sharing
    E. Summary of Requirements
Policy Statement 4
Application Process
    A. Processing of Applications
    B. Qualifying Education for Initial or Upgrade Applications
    C. Continuing Education for Reinstatement and Renewal 
Applications
    D. Experience for Initial or Upgrade Applications
    E. Examination
    F. Summary of Requirements
Policy Statement 5
Reciprocity
    A. Reciprocity Policy
    B. Application of Reciprocity Policy
    C. Appraiser Compliance Requirements
    D. Well-Documented Application Files
    E. Summary of Requirements
Policy Statement 6
Education
    A. Course Approval
    B. Distance Education
    C. Summary of Requirements
Policy Statement 7
State Agency Enforcement
    A. State Agency Regulatory Program
    B. Enforcement Process
    C. Summary of Requirements
Part B: AMC Program
Policy Statement 8
Statutes, Regulations, Policies and Procedures Governing State AMC 
Programs
    A. Participating States and ASC Oversight
    B. Relation to State Law
    C. Funding and Staffing
    D. Minimum Requirements for Registration and Supervision of AMCs 
as Established by the AMC Rule
    E. Summary of Requirements
Policy Statement 9
National Registry of AMCs (AMC Registry)
    A. Requirements for the AMC Registry
    B. Registry Fee and Invoicing Policies
    C. Reporting Requirements
    D. Access to AMC Registry Data
    E. Summary of Requirements
Policy Statement 10
State Agency Enforcement
    A. State Agency Regulatory Program
    B. Enforcement Process
    C. Summary of Requirements
Policy Statement 11
Statutory Implementation Period
Part C: Interim Sanctions
Policy Statement 12
Interim Sanctions
    A. Authority
    B. Opportunity to be Heard or Correct Conditions
    C. Procedures
Appendices
Appendix A--Compliance Review Process
Appendix B--Glossary of Terms

Introduction and Purpose

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 as amended (Title XI) established the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(ASC).\8\ The purpose of Title XI is to provide protection of Federal 
financial and public policy interests by upholding Title XI 
requirements for appraisals performed for federally related 
transactions. Specifically, those appraisals shall be performed in 
writing, in accordance with uniform standards, by individuals whose 
competency has been demonstrated and whose professional conduct will be 
subject to effective supervision.
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    \8\ The ASC board is made up of seven members. Five members are 
designated by the heads of the FFIEC agencies (Board of Governors of 
the Federal Reserve System, Bureau of Consumer Financial Protection, 
Federal Deposit Insurance Corporation, Office of the Comptroller of 
the Currency, and National Credit Union Administration). The other 
two members are designated by the heads of the Department of Housing 
and Urban Development and the Federal Housing Finance Agency.
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    Pursuant to Title XI, one of the ASC's core functions is to monitor 
the requirements established by the States \9\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions.\10\ Title XI as amended by the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(Dodd-Frank Act) \11\ expanded the ASC's core functions to include 
monitoring of the requirements established by States that elect to

[[Page 43969]]

register and supervise the operations and activities of appraisal 
management companies \12\ (AMCs).\13\
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    \9\ See Appendix B, Glossary of Terms, for the definition of 
``State.''
    \10\ See Appendix B, Glossary of Terms, for the definition of 
``federally related transaction.''
    \11\ Public Law. 111-203, 124 Stat. 1376.
    \12\ Title XI Sec.  1103(a)(1)(B), 12 U.S.C. 3332.
    \13\ See Appendix B, Glossary of Terms, for the definition of 
``appraisal management company'' or AMC.
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    The ASC performs periodic Compliance Reviews \14\ of each State 
appraiser regulatory program (Appraiser Program) to determine 
compliance or lack thereof with Title XI, and to assess implementation 
of minimum requirements for credentialing of appraisers as adopted by 
the Appraiser Qualifications Board (The Real Property Appraiser 
Qualification Criteria or AQB Criteria). As a result of the Dodd-Frank 
Act amendments to Title XI, States with an AMC regulatory program (AMC 
Program) will be evaluated during the Compliance Review to determine 
compliance or lack thereof with Title XI, and to assess implementation 
of the minimum requirements for State registration and supervision of 
AMCs as established by the
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    \14\ See Appendix A, Compliance Review Process.
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    AMC Rule.\15\
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    \15\ The Dodd-Frank Act required the Office of the Comptroller 
of the Currency; Board of Governors of the Federal Reserve System; 
Federal Deposit Insurance Corporation; National Credit Union 
Administration; Bureau of Consumer Financial Protection; and Federal 
Housing Finance Agency to establish, by rule, minimum requirements 
to be imposed by a participating State appraiser certifying and 
licensing agency on AMCs doing business in the State. (Title XI 
Sec.  1124(a), 12 U.S.C. 3353(a).) Those rules were finalized and 
published on June 9, 2015, at 80 Federal Register 32658 with an 
effective date of August 10, 2015. (12 CFR 34.210-34.216; 12 CFR 
225.190-225.196; 12 CFR 323.8-323.14; 12 CFR 1222.20-1222.26.)
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    The ASC is issuing these revised Policy Statements \16\ in three 
parts to provide States with the necessary information to maintain 
their Appraiser Programs and AMC Programs in compliance with Title XI:
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    \16\ These Policy Statements, adopted [date to be inserted when 
final], supersede all previous Policy Statements adopted by the ASC.
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    [rtarr8] Part A, Appraiser Program--Policy Statements 1 through 7 
correspond with the categories that are: (a) Evaluated during the 
Appraiser Program Compliance Review; and (b) included in the ASC's 
Compliance Review Report of the Appraiser Program.
    [rtarr8] Part B, AMC Program--Policy Statements 8 through 11 
correspond with the categories that are: (a) Evaluated during the AMC 
Program Compliance Review; and (b) included in the ASC's Compliance 
Review Report of the AMC Program.
    [rtarr8] Part C, Interim Sanctions--Policy Statement 12 sets forth 
required procedures in the event that interim sanctions are imposed 
against a State by the ASC for non-compliance in either the Appraiser 
Program or the AMC Program.

Part A: Appraiser Program

Policy Statement 1

Statutes, Regulations, Policies and Procedures Governing State 
Appraiser Programs
A. State Regulatory Structure
    Title XI requires the ASC to monitor each State appraiser 
certifying and licensing agency for the purpose of determining whether 
each such agency has in place policies, practices and procedures 
consistent with the requirements of Title XI.\17\ The ASC recognizes 
that each State may have legal, fiscal, regulatory or other factors 
that may influence the structure and organization of its Appraiser 
Program. Therefore, a State has flexibility to structure its Appraiser 
Program so long as it meets its Title XI-related responsibilities.
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    \17\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    States should maintain an organizational structure for appraiser 
certification, licensing and supervision that avoids conflicts of 
interest. A State agency may be headed by a board, commission or an 
individual. State board \18\ or commission members, or employees in 
policy or decision-making positions, should understand and adhere to 
State statutes and regulations governing performance of 
responsibilities consistent with the highest ethical standards for 
public service. In addition, Appraiser Programs using private entities 
or contractors should establish appropriate internal policies, 
procedures and safeguards to promote compliance with the State agency's 
responsibilities under Title XI and these Policy Statements.
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    \18\ See Appendix B, Glossary of Terms, for the definition of 
``State board.''
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B. Funding and Staffing
    The Dodd-Frank Act amended Title XI to require the ASC to determine 
whether States have sufficient funding and staffing to meet their Title 
XI requirements. Compliance with this provision requires that a State 
must provide its Appraiser Program with funding and staffing sufficient 
to carry out its Title XI-related duties. The ASC evaluates the 
sufficiency of funding and staffing as part of its review of all 
aspects of an Appraiser Program's effectiveness, including the adequacy 
of State boards, committees, or commissions responsible for carrying 
out Title XI-related duties.
C. Minimum Criteria
    Title XI requires States to adopt and/or implement all relevant AQB 
Criteria. Requirements established by a State for certified residential 
or certified general appraisers, as well as requirements established 
for licensed appraisers, trainee appraisers and supervisory appraisers 
must meet or exceed applicable AQB Criteria.
D. Federally Recognized Appraiser Classifications
State Certified Appraisers
    ``State certified appraisers'' means those individuals who have 
satisfied the requirements for residential or general certification in 
a State whose criteria for certification meet or exceed the applicable 
minimum AQB Criteria. Permitted scope of practice and designation for 
State certified residential or certified general appraisers must be 
consistent with State and Federal laws, including regulations and 
supplementary guidance.
State Licensed Appraisers
    ``State licensed appraisers'' means those individuals who have 
satisfied the requirements for licensing in a State whose criteria for 
licensing meet or exceed the applicable minimum AQB Criteria. The 
permitted scope of practice and designation for State licensed 
appraisers must be consistent with State and Federal laws, including 
regulations and supplementary guidance.
Trainee Appraisers
    ``Trainee appraisers'' means those individuals who have satisfied 
the requirements for credentialing in a State whose criteria for 
credentialing meet or exceed the applicable minimum AQB Criteria. Any 
minimum qualification requirements established by a State for 
individuals in the position of ``trainee appraiser'' or ``supervisory 
appraiser'' must meet or exceed the applicable minimum AQB Criteria. 
ASC staff will evaluate State designations such as ``registered 
appraiser,'' ``apprentice appraiser,'' ``provisional appraiser,'' or 
any other similar designation to determine if, in substance, such 
designation is consistent with a ``trainee appraiser'' designation and, 
therefore, administered to comply with Title XI. The permitted scope of 
practice and designation for trainee appraisers must be consistent with 
State and Federal laws, including regulations and supplementary 
guidance.
    Any State or Federal agency may impose additional appraiser 
qualification requirements for trainee, State licensed, certified 
residential or

[[Page 43970]]

certified general classifications, if they consider such requirements 
necessary to carry out their responsibilities under Federal and/or 
State statutes and regulations, so long as the additional qualification 
requirements do not preclude compliance with AQB Criteria.
E. Non-Federally Recognized Credentials
    States using non-federally recognized credentials or designations 
\19\ must ensure that they are easily distinguished from the federally 
recognized credentials.
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    \19\ See Appendix B, Glossary of Terms, for the definition of 
``non-federally recognized credentials or designations.''
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F. Appraisal Standards
    Title XI and the Federal financial institutions regulatory 
agencies' regulations mandate that all appraisals performed in 
connection with federally related transactions be in written form, 
prepared in accordance with generally accepted appraisal standards as 
promulgated by the Appraisal Standards Board (ASB) in the Uniform 
Standards of Professional Appraisal Practice (USPAP), and be subject to 
appropriate review for compliance with USPAP.\20\ States that have 
incorporated USPAP into State law should ensure that statutes or 
regulations are updated timely to adopt the current version of USPAP, 
or if State law allows, automatically incorporate the latest version of 
USPAP as it becomes effective. States should consider ASB Advisory 
Opinions, Frequently Asked Questions, and other written guidance issued 
by the ASB regarding interpretation and application of USPAP.
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    \20\ See Appendix B, Glossary of Terms for the definition of 
``Uniform Standards of Professional Appraisal Practice.''
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    Any State or Federal agency may impose additional appraisal 
standards if they consider such standards necessary to carry out their 
responsibilities, so long as additional appraisal standards do not 
preclude compliance with USPAP or the Federal financial institutions 
regulatory agencies' appraisal regulations for work performed for 
federally related transactions.
    The Federal financial institutions regulatory agencies' appraisal 
regulations define ``appraisal'' and identify which real estate-related 
financial transactions require the services of a State certified or 
licensed appraiser. These regulations define ``appraisal'' as a 
``written statement independently and impartially prepared by a 
qualified appraiser setting forth an opinion as to the market value of 
an adequately described property as of a specific date(s) supported by 
the presentation and analysis of relevant market information.'' Per 
these regulations, an appraiser performing an appraisal review which 
includes the reviewer providing his or her own opinion of value 
constitutes an appraisal. Under these same regulations, an appraisal 
review that does not include the reviewer providing his or her own 
opinion of value does not constitute an appraisal. Therefore, under the 
Federal financial institutions regulatory agencies' regulations, only 
those transactions that involve appraisals for federally related 
transactions require the services of a State certified or licensed 
appraiser.
G. Exemptions
    Title XI and the Federal financial institutions regulatory 
agencies' regulations specifically require the use of State certified 
or licensed appraisers in connection with the appraisal of certain real 
estate-related financial transactions.\21\ A State may not exempt any 
individual or group of individuals from meeting the State's 
certification or licensing requirements if the individual or group 
member performs an appraisal when Federal statutes and regulations 
require the use of a certified or licensed appraiser. For example, an 
individual who has been exempted by the State from its appraiser 
certification or licensing requirements because he or she is an 
officer, director, employee or agent of a federally regulated financial 
institution would not be permitted to perform an appraisal in 
connection with a federally related transaction.
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    \21\ Title XI Sec.  1112, 12 U.S.C. 3341; Title XI Sec.  1113, 
12 U.S.C. 3342; Title XI Sec.  1114, 12 U.S.C. 3343.
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H. ASC Staff Attendance at State Board Meetings
    The efficacy of the ASC's Compliance Review process rests on the 
ASC's ability to obtain reliable information about all areas of a 
State's Appraiser Program. ASC staff regularly attends open State board 
meetings as part of the on-site Compliance Review process. States are 
expected to make available for review by ASC staff minutes of closed 
meetings and executive sessions. States are encouraged to allow ASC 
staff to attend closed and executive sessions of State board meetings 
where such attendance would not violate State law or regulation or be 
inconsistent with other legal obligations of the State board. ASC staff 
is obligated to protect information obtained during the Compliance 
Review process concerning the privacy of individuals and any 
confidential matters.
I. Summary of Requirements
    1. States must require that appraisals be performed in accordance 
with the latest version of USPAP.\22\
---------------------------------------------------------------------------

    \22\ Title XI Sec.  1101, 12 U.S.C. 3331; Title XI Sec.  
1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification 
Criteria.
---------------------------------------------------------------------------

    2. States must, at a minimum, adopt and/or implement all relevant 
AQB Criteria.\23\
---------------------------------------------------------------------------

    \23\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States must have policies, practices and procedures consistent 
with Title XI.\24\
---------------------------------------------------------------------------

    \24\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States must have funding and staffing sufficient to carry out 
their Title XI-related duties.\25\
---------------------------------------------------------------------------

    \25\ Id; Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must use proper designations and permitted scope of 
practice for certified residential; certified general; licensed; and 
trainee classifications.\26\
---------------------------------------------------------------------------

    \26\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  1113, 12 
U.S.C. 3342; AQB Real Property Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    6. State board members, and any persons in policy or decision-
making positions, must perform their responsibilities consistent with 
Title XI.\27\
---------------------------------------------------------------------------

    \27\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    7. States' certification and licensing requirements must meet the 
minimum requirements set forth in Title XI.\28\
---------------------------------------------------------------------------

    \28\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345.
---------------------------------------------------------------------------

    8. State requirements for trainee appraisers and supervisory 
appraisers must meet or exceed the AQB Criteria.
    9. State agencies must be granted adequate authority by the State 
to maintain an effective regulatory Appraiser Program in compliance 
with Title XI.\29\
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    \29\ Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Policy Statement 2

Temporary Practice
A. Requirement for Temporary Practice
    Title XI requires State agencies to recognize, on a temporary 
basis, the certification or license of an out-of-State appraiser 
entering the State for the purpose of completing an appraisal 
assignment \30\ for a federally related transaction. States are not, 
however, required to grant temporary practice permits to trainee 
appraisers. The out-of-State appraiser must register with the State 
agency in the State of temporary practice (Host State). A State may 
determine the process necessary for

[[Page 43971]]

``registration'' provided such process complies with Title XI and does 
not impose ``excessive fees or burdensome requirements,'' as determined 
by the ASC.\31\ Thus, a credentialed appraiser \32\ from State A has a 
statutory right to enter State B (the Host State) to perform an 
assignment concerning a federally related transaction, so long as the 
appraiser registers with the State agency in State B prior to 
performing the assignment. Though Title XI contemplates reasonably free 
movement of credentialed appraisers across State lines, an out-of-State 
appraiser must comply with the Host State's real estate appraisal 
statutes and regulations and is subject to the Host State's full 
regulatory jurisdiction. States should utilize the National Registry of 
Appraisers to verify credential status on applicants for temporary 
practice.
---------------------------------------------------------------------------

    \30\ See Appendix B, Glossary of Terms, for the definition of 
``assignment.''
    \31\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
    \32\ See Appendix B, Glossary of Terms, for the definition of 
``credentialed appraisers.''
---------------------------------------------------------------------------

B. Excessive Fees or Burdensome Requirements
    Title XI prohibits States from imposing excessive fees or 
burdensome requirements, as determined by the ASC, for temporary 
practice.\33\ Adherence by State agencies to the following mandates and 
prohibitions will deter the imposition of excessive fees or burdensome 
requirements.
---------------------------------------------------------------------------

    \33\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    Host State agencies must:
    a. Issue temporary practice permits on an assignment basis;
    b. issue temporary practice permits within five business days of 
receipt of a completed application, or notify the applicant and 
document the file as to the circumstances justifying delay or other 
action;
    c. issue temporary practice permits designating the permit's 
effective date;
    d. take regulatory responsibility for a temporary practitioner's 
unethical, incompetent and/or fraudulent practices performed while in 
the State;
    e. notify the appraiser's home State agency \34\ in the case of 
disciplinary action concerning a temporary practitioner;
---------------------------------------------------------------------------

    \34\ See Appendix B, Glossary of Terms, for the definition of 
``home State agency.''
---------------------------------------------------------------------------

    f. allow at least one temporary practice permit extension through a 
streamlined process;
    g. track all temporary practice permits using a permit log which 
includes the name of the applicant, date application received, date 
completed application received, date of issuance, and date of 
expiration, if any (States are strongly encouraged to maintain this 
information in an electronic, sortable format); and
    h. maintain documentation sufficient to demonstrate compliance with 
this Policy Statement.
    Host State agencies may not:
    a. Limit the valid time period of a temporary practice permit to 
less than 6 months (unless the applicant requests a specific end date 
and the applicant is allowed an extension if required to complete the 
assignment, the applicant's credential is no longer in active status 
during that period of time);
    b. limit an appraiser to one temporary practice permit per calendar 
year; \35\
---------------------------------------------------------------------------

    \35\ State agencies may establish by statute or regulation a 
policy that places reasonable limits on the number of times an out-
of-State certified or licensed appraiser may exercise his or her 
temporary practice rights in a given year. If such a policy is not 
established, a State agency may choose not to honor an out-of-State 
certified or licensed appraiser's temporary practice rights if it 
has made a determination that the appraiser is abusing his or her 
temporary practice rights and is regularly engaging in real estate 
appraisal services within the State.
---------------------------------------------------------------------------

    c. charge a temporary practice permit fee exceeding $250, including 
one extension fee;
    d. impose State appraiser qualification requirements for education, 
experience and/or exam upon temporary practitioners;
    e. require temporary practitioners to obtain a certification or 
license in the State of temporary practice;
    f. require temporary practitioners to affiliate with an in-State 
licensed or certified appraiser;
    g. refuse to register licensed or certified appraisers seeking 
temporary practice in a State that does not have a licensed or 
certified level credential; or
    h. prohibit temporary practice.
    Home State agencies may not:
    a. Delay the issuance of a written ``letter of good standing'' or 
similar document for more than five business days after receipt of a 
request; or
    b. fail to consider and, if appropriate, take disciplinary action 
when one of its certified or licensed appraisers is disciplined by 
another State.
C. Summary of Requirements
    1. States must recognize, on a temporary basis, appraiser 
credentials issued by another State if the property to be appraised is 
part of a federally related transaction.\36\
---------------------------------------------------------------------------

    \36\ Title XI Sec.  1122(a)(1), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. State agencies must adhere to mandates and prohibitions as 
determined by the ASC that deter the imposition of excessive fees or 
burdensome requirements for temporary practice.\37\
---------------------------------------------------------------------------

    \37\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

Policy Statement 3

National Registry of Appraisers
A. Requirements for the National Registry of Appraisers
    Title XI requires the ASC to maintain a National Registry of State 
certified and licensed appraisers who are eligible to perform 
appraisals in federally related transactions (Appraiser Registry).\38\ 
Title XI further requires the States to transmit to the ASC: (1) A 
roster listing individuals who have received a State certification or 
license in accordance with Title XI; (2) reports on the issuance and 
renewal of licenses and certifications, sanctions, disciplinary 
actions, revocations and suspensions; and (3) the registry fee as set 
by the ASC \39\ from individuals who have received certification or 
licensing. States must notify the ASC as soon as practicable if a 
credential holder listed on the Appraiser Registry does not qualify for 
the credential held.
---------------------------------------------------------------------------

    \38\ Title XI Sec.  1103(a)(3), 12 U.S.C. 3332.
    \39\ Title XI Sec.  1109, Roster of State certified or licensed 
appraisers; authority to collect and transmit fees, requires the ASC 
to consider at least once every 5 years whether to adjust the dollar 
amount of the registry fees to account for inflation. (Title XI 
Sec.  1109(a), 12 U.S.C. 3338.)
---------------------------------------------------------------------------

    Roster and registry fee requirements apply to all individuals who 
receive State certifications or licenses, originally or by reciprocity, 
whether or not the individuals are, in fact, performing or planning to 
perform appraisals in federally related transactions. If an appraiser 
is certified or licensed in more than one State, the appraiser is 
required to be on each State's roster of certified or licensed 
appraisers, and a registry fee is due from each State in which the 
appraiser is certified or licensed.
    Only AQB-compliant certified and licensed appraisers in active 
status on the Appraiser Registry are eligible to perform appraisals in 
connection with federally related transactions. Only those appraisers 
whose registry fees have been transmitted to the ASC will be eligible 
to be on the Appraiser Registry for the period subsequent to payment of 
the fee.
    Some States may give State certified or licensed appraisers an 
option to not pay the registry fee. If a State certified or licensed 
appraiser chooses not to pay the registry fee, then the Appraiser 
Program must ensure that any potential user of that appraiser's 
services is aware that the appraiser is not eligible to perform 
appraisals for federally related transactions. The Appraiser Program 
must place a conspicuous notice directly on the face of any evidence of 
the appraiser's authority to appraise

[[Page 43972]]

stating, ``Not Eligible To Appraise Federally Related Transactions,'' 
and the appraiser must not be listed in active status on the Appraiser 
Registry.
    The ASC extranet application allows States to update their 
appraiser credential information directly to the Appraiser Registry. 
Only Authorized Registry Officials are allowed to request access for 
their State personnel (see section C below). The ASC will issue a User 
Name and Password to the designated State personnel responsible for 
that State's Appraiser Registry entries. Designated State personnel are 
required to protect the right of access, and not share their User Name 
or Password with anyone. States must adopt and implement a written 
policy to protect the right of access, as well as the ASC issued User 
Name and Password. The ASC will provide detailed specifications 
regarding the data elements on the Appraiser Registry.
B. Registry Fee and Invoicing Policies
    Each State must remit to the ASC the annual registry fee, as set by 
the ASC, for State certified or licensed appraisers within the State to 
be listed on the Appraiser Registry. Requests to prorate refunds or 
partial-year registrations will not be granted. If a State collects 
multiple-year fees for multiple-year certifications or licenses, the 
State may choose to remit to the ASC the total amount of the multiple-
year registry fees or the equivalent annual fee amount. The ASC will, 
however, record appraisers on the Appraiser Registry only for the 
number of years for which the ASC has received payment. Nonpayment by a 
State of an appraiser's registry fee may result in the status of that 
appraiser being listed as ``inactive.'' States must reconcile and pay 
registry invoices in a timely manner (45 calendar days after the 
invoice date). When a State's failure to pay a past due invoice results 
in appraisers being listed as inactive, the ASC will not change those 
appraisers back to active status until payment is received from the 
State. An inactive status on the Appraiser Registry, for whatever the 
reason, renders an appraiser ineligible to perform appraisals in 
connection with federally related transactions.
C. Access to Appraiser Registry Data
    The ASC Web site provides free access to the public portion of the 
Appraiser Registry at www.asc.gov. The public portion of the Appraiser 
Registry data may be downloaded using predefined queries or user-
customized applications.
    Access to the full database, which includes non-public data (e.g., 
certain disciplinary action information), is restricted to authorized 
State and Federal regulatory agencies. States must designate a senior 
official, such as an executive director, to serve as the State's 
Authorized Registry Official, and provide to the ASC, in writing, 
information regarding the designated Authorized Registry Official. 
States must ensure that the authorization information provided to the 
ASC is updated and accurate.
D. Information Sharing
    Information sharing (routine exchange of certain information among 
lenders, governmental entities, State agencies and the ASC) is 
essential for carrying out the purposes of Title XI. Title XI requires 
the ASC, any other Federal agency or instrumentality, or any federally 
recognized entity to report any action of a State certified or licensed 
appraiser that is contrary to the purposes of Title XI to the 
appropriate State agency for disposition. The ASC believes that full 
implementation of this Title XI requirement is vital to the integrity 
of the system of State appraiser regulation. States are encouraged to 
develop and maintain procedures for sharing of information among 
themselves.
    The Appraiser Registry's value and usefulness are largely dependent 
on the quality and frequency of State data submissions. Accurate and 
frequent data submissions from all States are necessary to maintain an 
up-to-date Appraiser Registry. States must submit appraiser data in a 
secure format to the ASC at least monthly. If there are no changes to 
the data, the State agency must notify the ASC of that fact in writing. 
States are encouraged to submit data as frequently as possible.
    States must report all disciplinary action \40\ taken against an 
appraiser to the ASC via the extranet application within 5 business 
days after the disciplinary action is final, as determined by State 
law.\41\ States not reporting via the extranet application must 
provide, in writing to the ASC, a description of the circumstances 
preventing compliance with this requirement.\42\
---------------------------------------------------------------------------

    \40\ See Appendix B, Glossary of Terms, for the definition of 
``disciplinary action.''
    \41\ Id.
    \42\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    For the most serious disciplinary actions (i.e., voluntary 
surrenders, suspensions and revocations, or any action that interrupts 
a credential holder's ability to practice), the appraiser's status must 
be changed on the Appraiser Registry to ``inactive,'' thereby making 
the appraiser ineligible to perform appraisals for federally related 
transactions or other transactions requiring the use of State certified 
or licensed appraisers.\43\
---------------------------------------------------------------------------

    \43\ Id.
---------------------------------------------------------------------------

    Title XI also contemplates the reasonably free movement of 
certified and licensed appraisers across State lines. This freedom of 
movement assumes, however, that certified and licensed appraisers are, 
in all cases, held accountable and responsible for their actions while 
performing appraisal activities.
E. Summary of Requirements
    1. States must reconcile and pay registry invoices in a timely 
manner (45 calendar days after the invoice date).\44\
---------------------------------------------------------------------------

    \44\ Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    2. States must report all disciplinary action taken against an 
appraiser to the ASC via the extranet application within 5 business 
days after the disciplinary action is final, as determined by State 
law.\45\
---------------------------------------------------------------------------

    \45\ Id.
---------------------------------------------------------------------------

    3. States not reporting via the extranet application must provide, 
in writing to the ASC, a description of the circumstances preventing 
compliance with this requirement.\46\
---------------------------------------------------------------------------

    \46\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. For the most serious disciplinary actions (i.e., voluntary 
surrenders, suspensions and revocations, or any action that interrupts 
a credential holder's ability to practice), the appraiser's status must 
be changed on the Appraiser Registry to ``inactive,'' thereby making 
the appraiser ineligible to perform appraisals for federally related 
transactions or other transactions requiring the use of State certified 
or licensed appraisers.\47\
---------------------------------------------------------------------------

    \47\ Id.
---------------------------------------------------------------------------

    5. States must designate a senior official, such as an executive 
director, who will serve as the State's Authorized Registry Official, 
and provide to the ASC, in writing, information regarding the selected 
Authorized Registry Official, and any individual(s) authorized to act 
on their behalf.\48\
---------------------------------------------------------------------------

    \48\ Id.
---------------------------------------------------------------------------

    6. States must ensure that the authorization information provided 
to the ASC is updated and accurate.\49\
---------------------------------------------------------------------------

    \49\ Id.
---------------------------------------------------------------------------

    7. States must adopt and implement a written policy to protect the 
right of access to the Appraiser Registry, as well as the ASC issued 
User Name and Password.\50\
---------------------------------------------------------------------------

    \50\ Id.

---------------------------------------------------------------------------

[[Page 43973]]

    8. States must ensure the accuracy of all data submitted to the 
Appraiser Registry.\51\
---------------------------------------------------------------------------

    \51\ Id.
---------------------------------------------------------------------------

    9. States must submit appraiser data (other than discipline) to the 
ASC at least monthly. If a State's data does not change during the 
month, the State agency must notify the ASC of that fact in 
writing.\52\
---------------------------------------------------------------------------

    \52\ Id.
---------------------------------------------------------------------------

    10. If a State certified or licensed appraiser chooses not to pay 
the registry fee, the State must ensure that any potential user of that 
appraiser's services is aware that the appraiser's certificate or 
license is limited to performing appraisals only in connection with 
non-federally related transactions.\53\
---------------------------------------------------------------------------

    \53\ Id.
---------------------------------------------------------------------------

Policy Statement 4

Application Process
    AQB Criteria sets forth the minimum education, experience and 
examination requirements applicable to all States for credentialing of 
real property appraisers (certified, licensed, trainee and 
supervisory). In the application process, States must, at a minimum, 
employ a reliable means of validating both education and experience 
credit claimed by applicants for credentialing.\54\ Effective January 
1, 2017, AQB Criteria also requires States to assess whether an 
applicant for a real property appraiser credential possesses a 
background that would not call into question public trust. The basis 
for such assessment shall be a matter left to the individual States, 
and must, at a minimum, be documented to the file.
---------------------------------------------------------------------------

    \54\ Includes applications for credentialing of trainee, 
licensed, certified residential or certified general 
classifications.
---------------------------------------------------------------------------

A. Processing of Applications
    States must process applications in a consistent, equitable and 
well-documented manner. Applications for credentialing should be timely 
processed by State agencies (within 90 calendar days after receipt of a 
completed application). Any delay in the processing of applications 
must be sufficiently documented in the file to explain the delay. 
States must ensure appraiser credential applications submitted for 
processing do not contain invalid examinations as established by AQB 
Criteria.
    States must obtain and maintain sufficient relevant documentation 
pertaining to an application for issuance, upgrade and renewal of a 
credential so as to enable understanding of the facts and 
determinations in the matter and the reasons for those determinations. 
Documentation must include:
    1. Application receipt date;
    2. Education;
    3. Experience;
    4. Examination;
    5. Continuing education; and
    6. Any administrative or disciplinary action taken in connection 
with the application process, including results of any continuing 
education audit.
B. Qualifying Education for Initial or Upgrade Applications
    States must verify that:
    (1) The applicant's claimed education courses are acceptable under 
AQB Criteria; and
    (2) the applicant has successfully completed courses consistent 
with AQB Criteria for the appraiser credential sought.
    States may not accept an affidavit for claimed qualifying education 
from applicants for any federally recognized credential.\55\ States 
must maintain adequate documentation to support verification of 
education claimed by applicants.
---------------------------------------------------------------------------

    \55\ If a State accepts education-related affidavits from 
applicants for initial licensure in any non-certified 
classification, upon the appraiser's application to upgrade to a 
certified classification, the State must require documentation to 
support the appraiser's educational qualification for the certified 
classification, not just the incremental amount of education 
required to move from the non-certified to the certified 
classification. This requirement applies to all federally recognized 
credentials.
---------------------------------------------------------------------------

C. Continuing Education for Reinstatement and Renewal Applications
1. Reinstatement Applications
    States must verify that:
    (1) The applicant's claimed continuing education courses are 
acceptable under AQB Criteria; and
    (2) the applicant has successfully completed all continuing 
education consistent with AQB Criteria for reinstatement of the 
appraiser credential sought.
    States may not accept an affidavit for continuing education claimed 
from applicants for reinstatement. Applicants for reinstatement must 
submit documentation to support claimed continuing education and States 
must maintain adequate documentation to support verification of claimed 
education.
2. Renewal Applications
    States must ensure that continuing education courses for renewal of 
an appraiser credential are consistent with AQB Criteria and that 
continuing education hours required for renewal of an appraiser 
credential were completed consistent with AQB Criteria. States may 
accept affidavits for continuing education credit claimed for 
credential renewal so long as the State implements a reliable 
validation procedure that adheres to the following objectives and 
requirements:
a. Validation Objectives
    The State's validation procedures must be structured to permit 
acceptable projections of the sample results to the entire population 
of subject appraisers. Therefore, the sample must include an adequate 
number of affidavits selected from each federally recognized credential 
level to have a reasonable chance of identifying appraisers who fail to 
comply with AQB Criteria, and the sample must include a statistically 
relevant representation of the appraiser population being sampled.
b. Minimum Standards
    (1) Validation must include a prompt post-approval audit. Each 
audit of an affidavit for continuing education credit claimed must be 
completed within 60 business days from the date the credential is 
scheduled for renewal (based on the credential's expiration date). To 
ensure the audit is a statistically relevant representation, a sampling 
of credentials that were renewed after the scheduled expiration date 
and/or beyond the date the sample was selected, must also be audited to 
ensure that a credential holder may not avoid being selected for a 
continuing education audit by renewing early or late.
    (2) States must audit the continuing education-related affidavit 
for each credentialed appraiser selected in the sampling procedure.
    (3) States must determine that education courses claimed conform to 
AQB Criteria and that the appraiser successfully completed each course.
    (4) When a State determines that an appraiser's continuing 
education does not meet AQB Criteria, and the appraiser has failed to 
complete any remedial action offered, the State must take appropriate 
action to suspend the appraiser's eligibility to perform appraisals in 
federally related transactions until such time that the requisite 
continuing education has been completed. The State must notify the ASC 
within five (5) business days after taking such action in order for the 
appraiser's record on the Appraiser Registry to be updated 
appropriately.
    (5) If a State determines that a renewal applicant knowingly 
falsely attested to completing the continuing education

[[Page 43974]]

required by AQB Criteria, the State must take appropriate 
administrative and/or disciplinary action and report such action, if 
deemed to be discipline, to the ASC within five (5) business days.
    (6) If more than ten percent of the audited appraisers fail to meet 
the AQB Criteria, the State must take remedial action \56\ to address 
the apparent weakness of its affidavit process. The ASC will determine 
on a case-by-case basis whether remedial actions are effective and 
acceptable.
---------------------------------------------------------------------------

    \56\ For example:
    (1) A State may conduct an additional audit using a higher 
percentage of audited appraisers; or
    (2) a State may publicly post action taken to sanction non-
compliant appraisers to increase awareness in the appraiser 
community of the importance of compliance with continuing education 
requirements.
---------------------------------------------------------------------------

    (7) In the case of a renewal being processed after the credential's 
expiration date, but within the State's allowed grace period for a late 
renewal, the State must establish a reliable process to audit 
affidavits for continuing education (e.g., requiring documentation of 
all continuing education).
c. Documentation
    States must maintain adequate documentation to support its 
affidavit renewal and audit procedures and actions.
d. List of Education Courses
    To promote accountability, the ASC encourages States accepting 
affidavits for continuing education credit claimed for credential 
renewal to require that the appraiser provide a list of courses to 
support the affidavit.
D. Experience for Initial or Upgrade Applications
    States must ensure that appraiser experience logs conform to AQB 
Criteria. States may not accept an affidavit for experience credit 
claimed by applicants for any federally recognized credential.\57\
---------------------------------------------------------------------------

    \57\ See Policy Statement 1D and E for discussion of ``federally 
recognized credential'' and ``non-federally recognized credential.'' 
If prior to July 1, 2013, a State accepted experience-related 
affidavits from applicants for initial licensure in any non-
certified classification, upon the appraiser's application to 
upgrade to a certified classification, the State must require 
experience documentation to support the appraiser's qualification 
for the certified classification, not just the incremental amount of 
experience required to move from the non-certified to the certified 
classification. For example, if a State accepted an experience 
affidavit from an appraiser to support the appraiser's initial hours 
to qualify for the licensed classification, and subsequently that 
appraiser applies to upgrade to the certified residential 
classification, the State must require documentation to support the 
full experience hours required for the certified residential 
classification, not just the difference in hours between the two 
classifications.
---------------------------------------------------------------------------

1. Validation Required
    States must implement a reliable validation procedure to verify 
that each applicant's experience meets AQB Criteria, including but not 
limited to, being USPAP compliant and containing the required number of 
hours and months.
2. Validation Procedures, Objectives and Requirements
a. Experience Hours Validation
    States must determine the hours and time period claimed on the 
experience log are accurate. Appraiser Program staff or State board 
members must select the work product to validate the experience hours 
claimed; applicants may not have any role in this selection process.
b. USPAP Compliance
    States must analyze a representative sample of the applicant's work 
product for compliance with USPAP. For appraisal experience to be 
acceptable under AQB Criteria, it must be USPAP compliant. States must 
exercise due diligence in determining whether submitted documentation 
of experience or work product demonstrates compliance with USPAP. 
Persons analyzing work product for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP, and States must be 
able to document how such persons are so qualified.
c. Determination of Experience Time Periods
    Experience time periods must conform to requirements set forth in 
the AQB Criteria for the credential sought.
d. Supporting Documentation
    States must maintain adequate documentation to support validation 
methods. The applicant's file, either electronic or paper, must include 
the information necessary to identify each appraisal assignment 
selected to validate the experience hours claimed and each appraisal 
assignment analyzed by the State for USPAP compliance, notes, letters 
and/or reports prepared by the official(s) evaluating the report for 
USPAP compliance, and any correspondence exchanged with the applicant 
regarding the appraisals submitted. This supporting documentation may 
be discarded upon the completion of the first ASC Compliance Review 
performed after the credential issuance or denial for that applicant.
E. Examination
    States must ensure that an appropriate AQB-approved qualifying 
examination is administered for each of the federally recognized 
appraiser classifications requiring an examination.
F. Summary of Requirements
Processing of Applications
    1. States must process applications in a consistent, equitable and 
well-documented manner.\58\
---------------------------------------------------------------------------

    \58\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must ensure appraiser credential applications submitted 
for processing do not contain invalid examinations as established by 
AQB Criteria.\59\
---------------------------------------------------------------------------

    \59\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    3. States must obtain and maintain sufficient relevant 
documentation pertaining to an application for issuance, upgrade or 
renewal of a credential so as to enable understanding of the facts and 
determinations in the matter and the reasons for those 
determinations.\60\
---------------------------------------------------------------------------

    \60\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Education
    1. States must verify that the applicant's claimed education 
courses are acceptable under AQB Criteria, whether for initial 
credentialing, renewal, upgrade or reinstatement.\61\
---------------------------------------------------------------------------

    \61\ Id.
---------------------------------------------------------------------------

    2. States must verify that the applicant has successfully completed 
courses consistent with AQB Criteria for the appraiser credential 
sought, whether for initial credentialing, renewal, upgrade or 
reinstatement.\62\
---------------------------------------------------------------------------

    \62\ Id.
---------------------------------------------------------------------------

    3. States must maintain adequate documentation to support 
verification.\63\
---------------------------------------------------------------------------

    \63\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States may not accept an affidavit for education claimed from 
applicants for any federally recognized credential.\64\
---------------------------------------------------------------------------

    \64\ Id.
---------------------------------------------------------------------------

    5. States may not accept an affidavit for continuing education 
claimed from applicants for reinstatement.\65\
---------------------------------------------------------------------------

    \65\ Id.
---------------------------------------------------------------------------

    6. States may accept affidavits for continuing education credit 
claimed for credential renewal so long as the State implements a 
reliable validation procedure.\66\
---------------------------------------------------------------------------

    \66\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    7. Audits of affidavits for continuing education credit claimed 
must be completed within sixty (60) business days from the date the 
credential is scheduled for renewal (based on the credential's 
expiration date).\67\
---------------------------------------------------------------------------

    \67\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    8. In the case of a renewal being processed after the credential's

[[Page 43975]]

expiration date, but within the State's allowed grace period for a late 
renewal, the State must establish a reliable process to audit 
affidavits for continuing education (e.g., requiring documentation of 
all continuing education).\68\
---------------------------------------------------------------------------

    \68\ Id.
---------------------------------------------------------------------------

    9. States are required to take remedial action when it is 
determined that more than ten percent of audited appraiser's affidavits 
for continuing education credit claimed fail to meet the minimum AQB 
Criteria.\69\
---------------------------------------------------------------------------

    \69\ Id.
---------------------------------------------------------------------------

    10. States are required to take appropriate administrative and/or 
disciplinary action when it is determined that an applicant knowingly 
falsely attested to completing continuing education.\70\
---------------------------------------------------------------------------

    \70\ Id.
---------------------------------------------------------------------------

    11. When a State determines that an appraiser's continuing 
education does not meet AQB Criteria, and the appraiser has failed to 
complete any remedial action offered, the State must take appropriate 
action to suspend the appraiser's eligibility to perform appraisals in 
federally related transactions until such time that the requisite 
continuing education has been completed. The State must notify the ASC 
within five (5) business days after taking such action in order for the 
appraiser's record on the Appraiser Registry to be updated 
appropriately.\71\
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

Experience
    1. States may not accept an affidavit for experience credit claimed 
from applicants for any federally recognized credential.\72\
---------------------------------------------------------------------------

    \72\ Id.
---------------------------------------------------------------------------

    2. States must ensure that appraiser experience logs conform to AQB 
Criteria.\73\
---------------------------------------------------------------------------

    \73\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    3. States must use a reliable means of validating appraiser 
experience claims on all initial or upgrade applications for appraiser 
credentialing.\74\
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    \74\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States must select the work product to validate the experience 
hours claimed on all initial or upgrade applications for appraiser 
credentialing.\75\
---------------------------------------------------------------------------

    \75\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must analyze a representative sample of the applicant's 
work product for compliance with USPAP on all initial or upgrade 
applications for appraiser credentialing.\76\
---------------------------------------------------------------------------

    \76\ Id.
---------------------------------------------------------------------------

    6. States must exercise due diligence in determining whether 
submitted documentation of experience or work product demonstrates 
compliance with USPAP on all initial or upgrade applications for 
appraiser credentialing.\77\
---------------------------------------------------------------------------

    \77\ Id.
---------------------------------------------------------------------------

    7. Persons analyzing work product for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP, and States must be 
able to document how such persons are so qualified.\78\
---------------------------------------------------------------------------

    \78\ Id.
---------------------------------------------------------------------------

    8. Experience time periods must conform to requirements set forth 
in the AQB Criteria for the credential sought.\79\
---------------------------------------------------------------------------

    \79\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Examination
    1. States must ensure that an appropriate AQB-approved qualifying 
examination is administered for each of the federally recognized 
credentials requiring an examination.\80\
---------------------------------------------------------------------------

    \80\ Id.
---------------------------------------------------------------------------

Policy Statement 5

Reciprocity
A. Reciprocity Policy
    Title XI contemplates the reasonably free movement of certified and 
licensed appraisers across State lines. The ASC monitors Appraiser 
Programs for compliance with the reciprocity provision of Title XI as 
amended by the Dodd-Frank Act.\81\ Title XI requires that in order for 
a State's appraisers to be eligible to perform appraisals for federally 
related transactions, the State must have a policy in place for issuing 
reciprocal credentials IF:
---------------------------------------------------------------------------

    \81\ Title XI Sec.  1122(b), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    a. The appraiser is coming from a State (Home State) that is ``in 
compliance'' with Title XI as determined by the ASC; AND
    b. (i) the appraiser holds a valid credential from the Home State; 
AND
    (ii) the credentialing requirements of the Home State \82\ meet or 
exceed those of the reciprocal credentialing State (Reciprocal 
State).\83\
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    \82\ As they exist at the time of application for reciprocal 
credential.
    \83\ Id.
---------------------------------------------------------------------------

    An appraiser relying on a credential from a State that does not 
have such a policy in place may not perform appraisals for federally 
related transactions. A State may be more lenient in the issuance of 
reciprocal credentials by implementing a more open door policy. 
However, States cannot impose additional impediments to obtaining 
reciprocal credentials.
    For purposes of implementing the reciprocity policy, States with an 
ASC Finding \84\ of ``Poor'' do not satisfy the ``in compliance'' 
provision for reciprocity. Therefore, States are not required to 
recognize, for purposes of granting a reciprocal credential, the 
license or certification of an appraiser credentialed in a State with 
an ASC Finding of ``Poor.''
---------------------------------------------------------------------------

    \84\ See Appendix A, Compliance Review Process, for an 
explanation of ASC Findings.
---------------------------------------------------------------------------

B. Application of Reciprocity Policy
    The following examples illustrate application of reciprocity in a 
manner that complies with Title XI. The examples refer to the 
reciprocity policy requiring issuance of a reciprocal credential IF:
    a. The appraiser is coming from a State that is ``in compliance''; 
AND
    b. (i) the appraiser holds a valid credential from that State; AND
    (ii) the credentialing requirements of that State (as they 
currently exist) meet or exceed those of the reciprocal credentialing 
State (as they currently exist).
Example 1. Additional Requirements Imposed on Applicants
    State A requires that prior to issuing a reciprocal credential the 
applicant must certify that disciplinary proceedings are not pending 
against that applicant in any jurisdiction. Under b.(ii) above, if this 
requirement is not imposed on all of its own applicants for 
credentialing, STATE A cannot impose this requirement on applicants for 
reciprocal credentialing.
Example 2. Credentialing Requirements
    An appraiser is seeking a reciprocal credential in STATE A. The 
appraiser holds a valid credential in STATE Z, even though it was 
issued in 2007. This satisfies b.(i) above. However, in order to 
satisfy b.(ii), STATE A would evaluate STATE Z's credentialing 
requirements as they currently exist to determine whether they meet or 
exceed STATE A's current requirements for credentialing.
Example 3. Multiple State Credentials
    An appraiser credentialed in several States is seeking a reciprocal 
credential in State A. That appraiser's initial credentials were 
obtained through examination in the original credentialing State and 
through reciprocity in the additional States. State A requires the 
applicant to provide a ``letter of good standing'' from the State of 
original credentialing as a condition of granting a reciprocal 
credential. State A may not impose such a requirement since Title XI 
does not

[[Page 43976]]

distinguish between credentials obtained by examination and credentials 
obtained by reciprocity for purposes of granting reciprocal 
credentials.
C. Appraiser Compliance Requirements
    In order to maintain a credential granted by reciprocity, 
appraisers must comply with the credentialing State's policies, rules 
and statutes governing appraisers, including requirements for payment 
of certification and licensing fees, as well as continuing 
education.\85\
---------------------------------------------------------------------------

    \85\ A State may offer to accept continuing education (CE) for a 
renewal applicant who has satisfied CE requirements of a home State; 
however, a State may not impose this as a requirement for renewal, 
thereby imposing a requirement for the renewal applicant to retain a 
home State credential.
---------------------------------------------------------------------------

D. Well-Documented Application Files
    States must obtain and maintain sufficient relevant documentation 
pertaining to an application for issuance of a credential by 
reciprocity so as to enable understanding of the facts and 
determinations in the matter and the reasons for those determinations.
E. Summary of Requirements
    1. States must have a reciprocity policy in place for issuing a 
reciprocal credential to an appraiser from another State under the 
conditions specified in Title XI in order for the State's appraisers to 
be eligible to perform appraisals for federally related 
transactions.\86\
---------------------------------------------------------------------------

    \86\ Title XI Sec.  1122(b), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. States may be more lenient in the issuance of reciprocal 
credentials by implementing a more open door policy; however, States 
may not impose additional impediments to issuance of reciprocal 
credentials.\87\
---------------------------------------------------------------------------

    \87\ Id.
---------------------------------------------------------------------------

    3. States must obtain and maintain sufficient relevant 
documentation pertaining to an application for issuance of a credential 
by reciprocity so as to enable understanding of the facts and 
determinations in the matter and the reasons for those 
determinations.\88\
---------------------------------------------------------------------------

    \88\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Policy Statement 6

Education
    AQB Criteria sets forth minimum requirements for appraiser 
education courses. This Policy Statement addresses proper 
administration of education requirements for compliance with AQB 
Criteria. (For requirements concerning qualifying and continuing 
education in the application process, see Policy Statement 4, 
Application Process.)
A. Course Approval
    States must ensure that approved appraiser education courses are 
consistent with AQB Criteria and maintain sufficient documentation to 
support that approved appraiser education courses conform to AQB 
Criteria.
    States should ensure that course approval expiration dates assigned 
by the State coincide with the endorsement period assigned by the AQB's 
Course Approval Program or any other AQB-approved organization 
providing approval of course design and delivery. States may not 
continue to accept AQB approved courses after the AQB's expiration date 
unless the course content is reviewed and approved by the State.
    States should ensure that educational providers are afforded equal 
treatment in all respects.\89\
---------------------------------------------------------------------------

    \89\ For example:
    (1) Consent agreements requiring additional education should not 
specify a particular course provider when there are other providers 
on the State's approved course listing offering the same course; and
    (2) courses from professional organizations should not be 
automatically approved and/or approved in a manner that is less 
burdensome than the State's normal approval process.
---------------------------------------------------------------------------

    States are encouraged to accept courses approved by the AQB's 
Course Approval Program.
B. Distance Education
    States must ensure that distance education courses meet AQB 
Criteria and that the delivery mechanism for distance education courses 
offered by a non-academic provider, including secondary providers, has 
been approved by an AQB-approved organization providing approval of 
course design and delivery.
    States may not continue to accept courses after the AQB-approved 
organization's approval of course design and delivery date has expired.
C. Summary of Requirements
    1. States must ensure that appraiser education courses are 
consistent with AQB Criteria.\90\
---------------------------------------------------------------------------

    \90\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    2. States must maintain sufficient documentation to support that 
approved appraiser courses conform to AQB Criteria.\91\
---------------------------------------------------------------------------

    \91\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States must ensure the delivery mechanism for distance education 
courses offered by a non-academic provider, including secondary 
providers, has been approved by an AQB-approved organization providing 
approval of course design and delivery.\92\
---------------------------------------------------------------------------

    \92\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Policy Statement 7

State Agency Enforcement
A. State Agency Regulatory Program
    Title XI requires the ASC to monitor the States for the purpose of 
determining whether the State processes complaints and completes 
investigations in a reasonable time period, appropriately disciplines 
sanctioned appraisers and maintains an effective regulatory 
program.\93\
---------------------------------------------------------------------------

    \93\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

B. Enforcement Process
    States must ensure that the system for processing and investigating 
complaints \94\ and sanctioning appraisers is administered in a timely, 
effective, consistent, equitable, and well-documented manner.
---------------------------------------------------------------------------

    \94\ See Appendix B, Glossary of Terms, for the definition of 
``complaint.''
---------------------------------------------------------------------------

1. Timely Enforcement
    States must process complaints of appraiser misconduct or 
wrongdoing in a timely manner to ensure effective supervision of 
appraisers, and when appropriate, that incompetent or unethical 
appraisers are not allowed to continue their appraisal practice. Absent 
special documented circumstances, final administrative decisions 
regarding complaints must occur within one year (12 months) of the 
complaint filing date. \95\ Special documented circumstances are those 
extenuating circumstances (fully documented) beyond the control of the 
State agency that delays normal processing of a complaint such as: 
complaints involving a criminal investigation by a law enforcement 
agency when the investigative agency requests that the State refrain 
from proceeding; final disposition that has been appealed to a higher 
court; documented medical condition of the respondent; ancillary civil 
litigation; and complex cases that involve multiple individuals and 
reports. Such special documented circumstances also include those 
periods when State rules require referral of a complaint to another 
State entity for review and the State agency is precluded from further 
processing of the complaint until it is returned. In that circumstance, 
the State agency should document the required referral and the

[[Page 43977]]

time period during which the complaint was not under its control or 
authority.
---------------------------------------------------------------------------

    \95\ The one-year period for resolution of complaints is not 
intended to have the impact of a statute of limitation or statute of 
repose.
---------------------------------------------------------------------------

2. Effective Enforcement
    Effective enforcement requires that States investigate allegations 
of appraiser misconduct or wrongdoing, and if allegations are proven, 
take appropriate disciplinary or remedial action. Dismissal of an 
alleged violation solely due to an ``absence of harm to the public'' is 
inconsistent with Title XI. Financial loss or the lack thereof is not 
an element in determining whether there is a violation. The extent of 
such loss, however, may be a factor in determining the appropriate 
level of discipline.
    Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP and States must be 
able to document how such persons are so qualified.
    States must analyze each complaint to determine whether additional 
violations, especially those relating to USPAP, should be added to the 
complaint.
    Closure of a complaint based solely on a State's statute of 
limitations that results in dismissal of a complaint without the 
investigation of the merits of the complaint is inconsistent with the 
Title XI requirement that States assure effective supervision of the 
activities of credentialed appraisers.\96\
---------------------------------------------------------------------------

    \96\ Title XI Sec.  1117, 12 U.S.C. 3346.
---------------------------------------------------------------------------

3. Consistent and Equitable Enforcement
    Absent specific documented facts or considerations, substantially 
similar cases within a State should result in similar dispositions.
4. Well-Documented Enforcement
    States must obtain and maintain sufficient relevant documentation 
pertaining to a matter so as to enable understanding of the facts and 
determinations in the matter and the reasons for those determinations.
a. Complaint Files
    Complaint files must:
    <bullet> Include documentation outlining the progress of the 
investigation;
    <bullet> demonstrate that appraisal reports are analyzed and any 
USPAP violations are identified and considered, whether or not they 
were the subject of the complaint;
    <bullet> include rationale for the final outcome of the case (i.e., 
dismissal or imposition of discipline);
    <bullet> include documentation explaining any delay in processing, 
investigation or adjudication;
    <bullet> contain documentation that all ordered or agreed upon 
discipline, such as probation, fine, or completion of education is 
tracked and that completion of all terms is confirmed; and
    <bullet> be organized in a manner that allows understanding of the 
steps taken throughout the complaint, investigation, and adjudicatory 
process.
b. Complaint Logs
    States must track all complaints using a complaint log. The 
complaint log must record all complaints, regardless of their 
procedural status in the investigation and/or resolution process, 
including complaints pending before the State board, Office of the 
Attorney General, other law enforcement agencies, and/or offices of 
administrative hearings.
    The complaint log must include the following information (States 
are strongly encouraged to maintain this information in an electronic, 
sortable format):

1. Case number
2. Name of respondent
3. Actual date the complaint was received by the State
4. Source of complaint (e.g., consumer, lender, AMC, bank regulator, 
appraiser, hotline) or name of complainant
5. Current status of the complaint
6. Date the complaint was closed (e.g., final disposition by the 
administrative hearing agency, Office of the Attorney General, State 
Appraiser Regulatory Agency or Court of Appeals)
7. Method of disposition (e.g., dismissal, letter of warning, consent 
order, final order)
8. Terms of disposition (e.g., probation, fine, education, mentorship)
9. In the case of open complaints, the most recent activity and date 
thereof (e.g. respondent's response to complaint received, contacted 
Attorney General for a status update, Board voted to offer a consent 
agreement)
C. Summary of Requirements
    1. States must maintain relevant documentation to enable 
understanding of the facts and determinations in the matter and the 
reasons for those determinations.\97\
---------------------------------------------------------------------------

    \97\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must resolve all complaints filed against appraisers 
within one year (12 months) of the complaint filing date, except for 
special documented circumstances.\98\
---------------------------------------------------------------------------

    \98\ Id.
---------------------------------------------------------------------------

    3. States must ensure that the system for processing and 
investigating complaints and sanctioning appraisers is administered in 
an effective, consistent, equitable, and well-documented manner.\99\
---------------------------------------------------------------------------

    \99\ Id.
---------------------------------------------------------------------------

    4. States must track complaints of alleged appraiser misconduct or 
wrongdoing using a complaint log.\100\
---------------------------------------------------------------------------

    \100\ Id.
---------------------------------------------------------------------------

    5. States must appropriately document enforcement files and include 
rationale.\101\
---------------------------------------------------------------------------

    \101\ Id.
---------------------------------------------------------------------------

    6. States must regulate, supervise and discipline their 
credentialed appraisers.\102\
---------------------------------------------------------------------------

    \102\ Id.
---------------------------------------------------------------------------

    7. Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP, and States must be 
able to document how such persons are so qualified.\103\
---------------------------------------------------------------------------

    \103\ Id.
---------------------------------------------------------------------------

Part B: AMC Program

Policy Statement 8

Statutes, Regulations, Policies and Procedures Governing State AMC 
Programs
A. Participating States and ASC Oversight
    States are not required to establish an AMC registration and 
supervision program. For those States electing to participate in the 
registration and supervision of AMCs (participating States), ASC staff 
will informally monitor the State's progress to implement the 
requirements of Title XI and the AMC Rule.\104\ Formal ASC oversight of 
State AMC Programs will begin at the next regularly scheduled 
Compliance Review of a State after the following occurs:
---------------------------------------------------------------------------

    \104\ Title XI Sec.  1103(a)(1)(B), 12 U.S.C. 3332. AMC Rule 
means the interagency final rule on minimum requirements for State 
registration and supervision of AMCs (12 CFR 34.210-34.216; 12 CFR 
225.190-225.196; 12 CFR 323.8-323.14; 12 CFR 1222.20-1222.26.
---------------------------------------------------------------------------

    1. A State decides to be a participating State pursuant to the AMC 
Rule;
    2. A State establishes an AMC program in accordance with the AMC 
Rule; and
    3. A State begins reporting to the National Registry of AMCs (AMC 
Registry).
    Formal ASC oversight will consist of evaluating AMC Programs in 
participating States during the Compliance Review process to determine 
compliance or lack thereof with Title XI, and to assess implementation 
of the minimum requirements for State registration and supervision of 
AMCs as established by

[[Page 43978]]

the AMC Rule. Upon expiration of the statutory implementation period 
(see Policy Statement 11, Statutory Implementation Period), Compliance 
Reviews will include ASC oversight of AMC Programs for any 
participating State.
B. Relation to State Law
    Participating States may establish requirements in addition to 
those in the AMC Rule.
    Participating States may also have a more expansive definition of 
AMCs.\105\ However, if a participating State has a more expansive 
definition of AMCs than in Title XI (thereby encompassing State 
regulation of AMCs that are not within the Title XI definition of AMC), 
the State must ensure such AMCs are identified as such in the State 
database, just as States currently do for non-federally recognized 
credentials or designations. Only those AMCs that meet the Federal 
definition of AMC will be eligible to be on the AMC Registry.
---------------------------------------------------------------------------

    \105\ Title XI as amended by the Dodd-Frank Act defines 
``appraisal management company'' to mean, in part, an external third 
party that oversees a network or panel of more than 15 appraisers 
(State certified or licensed) in a State, or 25 or more appraisers 
nationally (two or more States) within a given year. (12 U.S.C. 
3350(11).) Title XI as amended by the Dodd-Frank Act also allows 
States to adopt requirements in addition to those in the AMC Rule. 
(12 U.S.C. 3353(b).) For example, States may decide to supervise 
entities that provide appraisal management services, but do not meet 
the size thresholds of the Title XI definition of AMC. If a State 
has a more expansive regulatory framework that covers entities that 
provide appraisal management services but do not meet the Title XI 
definition of AMC, the State should only submit information 
regarding AMCs meeting the Title XI definition to the AMC Registry.
---------------------------------------------------------------------------

C. Funding and Staffing
    The Dodd-Frank Act amended Title XI to require the ASC to determine 
whether participating States have sufficient funding and staffing to 
meet their Title XI requirements. Compliance with this provision 
requires that a State must provide its AMC Program with funding and 
staffing sufficient to carry out its Title XI-related duties. The ASC 
evaluates the sufficiency of funding and staffing as part of its review 
of all aspects of an AMC Program's effectiveness, including the 
adequacy of State boards, committees, or commissions responsible for 
carrying out Title XI-related duties.
D. Minimum Requirements for Registration and Supervision of AMCs as 
Established by the AMC Rule
1. AMC Registration and Supervision
    If a State chooses to participate in the registration and 
supervision of AMCs in accordance with the AMC Rule, the State will be 
required to comply with the minimum requirements set forth in the AMC 
Rule. States should refer to the AMC Rule for compliance requirements 
\106\ as this Policy Statement merely summarizes what the AMC Rule 
requires of participating States.
---------------------------------------------------------------------------

    \106\ See footnote 107.
---------------------------------------------------------------------------

    (a) The AMC Rule includes requirements for participating States to 
establish and maintain within the State appraiser certifying and 
licensing agency an AMC Program with the legal authority and mechanisms 
to:
    (1) Review and approve or deny AMC initial registration 
applications and/or renewals for registration;
    (2) Examine records of AMCs and require AMCs to submit information;
    (3) Verify that appraisers on AMCs' panels hold valid State 
credentials;
    (4) Conduct investigations of AMCs to assess potential violations 
of appraisal-related laws, regulations, or orders;
    (5) Discipline, suspend, terminate, or deny renewal of the 
registration of an AMC that violates appraisal-related laws, 
regulations, or orders; and
    (6) Report an AMC's violation of appraisal-related laws, 
regulations, or orders, as well as disciplinary and enforcement actions 
and other relevant information about an AMC's operations, to the ASC.
    (b) The AMC Rule includes requirements for participating States to 
impose requirements on AMCs that are not Federally regulated AMCs \107\ 
to:
---------------------------------------------------------------------------

    \107\ ``Federally regulated AMCs,'' meaning 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, are not required to 
register with the State (Title XI Sec.  1124(c), 12 U.S.C. 3353(c)).
---------------------------------------------------------------------------

    (1) Register with and be subject to supervision by the State 
appraiser certifying and licensing agency;
    (2) Engage only State-certified or State-licensed 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) through 
(i) of the Truth in Lending Act, 15 U.S.C. 1639e(a) through (i), and 
regulations thereunder.
2. Ownership Limitations for State-Registered AMCs
A. Appraiser Certification or Licensing of Owners
    An AMC subject to State registration shall not be registered by a 
State or included on the AMC 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 for a substantive cause,\108\ as 
determined by the State appraiser certifying and licensing agency. A 
State's process for review could, for example, be by questionnaire, or 
affidavit, or background screening, or otherwise. States must document 
to the file the State's method of review and the result.
---------------------------------------------------------------------------

    \108\ An AMC subject to State registration is not barred from 
being registered by a State or included on the AMC Registry of AMCs 
if the license or certificate of the appraiser with an ownership 
interest was not revoked for a substantive cause and has been 
reinstated by the State or States in which the appraiser was 
licensed or certified. (12 CFR 34.210-34.216; 12 CFR 225.190-
225.196; 12 CFR 323.8-323.14; 12 CFR 1222.20-1222.26.)
---------------------------------------------------------------------------

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 not to have good moral character; or
    (2) Fails to submit to a background investigation carried out by 
the State.
    A State's process for review could, for example, be by 
questionnaire, or affidavit, or background screening, or otherwise. The 
ASC would expect written documentation of the State's method of review 
and the result.
3. Requirements for Federally Regulated AMCs
    Participating States are not required to identify Federally 
regulated AMCs \109\ operating in their States, but rather the Federal 
financial institution regulatory agencies are responsible for requiring 
such AMCs to identify themselves to participating States and report 
required information.
---------------------------------------------------------------------------

    \109\ See footnote 107.
---------------------------------------------------------------------------

    A Federally regulated AMC shall not be included on the AMC Registry 
if such AMC, in whole or in part, directly or indirectly, is owned by 
any person who

[[Page 43979]]

has had an appraiser license or certificate refused, denied, cancelled, 
surrendered in lieu of revocation, or revoked in any State for a 
substantive cause, as determined by the ASC.
E. Summary of Requirements
    1. Participating States must establish and maintain an AMC Program 
with the legal authority and mechanisms consistent with the AMC 
Rule.\110\
---------------------------------------------------------------------------

    \110\ 12 CFR 34.210-34.216; 12 CFR 225.190-225.196; 12 CFR 
323.8-323.14; 12 CFR 1222.20-1222.26.
---------------------------------------------------------------------------

    2. Participating States must impose requirements on AMCs consistent 
with the AMC Rule.\111\
---------------------------------------------------------------------------

    \111\ Id.
---------------------------------------------------------------------------

    3. Participating States must enforce and document ownership 
limitations for State-registered AMCs.\112\
---------------------------------------------------------------------------

    \112\ Id.
---------------------------------------------------------------------------

    4. Only those AMCs that meet the Federal definition of AMC will be 
eligible to be on the AMC Registry. Therefore, participating States 
that have a more expansive definition of AMCs than in the AMC Rule must 
ensure such non-Federally recognized AMCs are identified as such in the 
State database.\113\
---------------------------------------------------------------------------

    \113\ Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must have funding and staffing sufficient to carry out 
their Title XI-related duties.\114\
---------------------------------------------------------------------------

    \114\ Id.
---------------------------------------------------------------------------

Policy Statement 9

National Registry of AMCs (AMC Registry)
A. Requirements for the AMC Registry
    Title XI requires the ASC to maintain the AMC Registry of AMCs that 
are either registered with and subject to supervision of a 
participating State or are operating subsidiaries of a Federally 
regulated financial institution.\115\ Title XI further requires the 
States to transmit to the ASC: (1) Reports on a timely basis of 
supervisory activities involving AMCs, including investigations 
resulting in disciplinary action being taken; and (2) the registry fee 
as set by the ASC \116\ from AMCs that are either registered with a 
participating State or are Federally regulated AMCs.\117\
---------------------------------------------------------------------------

    \115\ Title XI Sec.  1103(a)(6), 12 U.S.C. 3332.
    \116\ Title XI Sec.  1109(a)(4), 12 U.S.C. 3338.
    \117\ Title XI Sec.  1109(a)(3) and (4), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    As with appraiser registry fees, Title XI, Sec.  1109(a)(4)(b) 
requires the AMC registry fee to be collected by each participating 
State and transmitted to the ASC. Therefore, as with appraisers, an AMC 
will pay a registry fee in each participating State in which the AMC 
operates. As with appraisers, an AMC operating in multiple 
participating States will pay a registry fee in multiple States in 
order to be on the AMC Registry for each State.
    States must notify the ASC as soon as practicable if an AMC listed 
on the AMC Registry is no longer registered with or operating in the 
State. The ASC extranet application allows States to update their AMC 
information directly to the AMC Registry.
B. Registry Fee and Invoicing Policies
    Each State must remit to the ASC the annual registry fee, as set by 
the ASC, for AMCs to be listed on the AMC Registry. Requests to prorate 
refunds or partial-year registrations will not be granted. If a State 
collects multiple-year fees for multiple-years, the State may choose to 
remit to the ASC the total amount of the multiple-year registry fees or 
the equivalent annual fee amount. The ASC will, however, record AMCs on 
the AMC Registry only for the number of years for which the ASC has 
received payment. States must reconcile and pay registry invoices in a 
timely manner (45 calendar days after receipt of the invoice).
C. Reporting Requirements
    State agencies must report all disciplinary action \118\ taken 
against an AMC to the ASC via the extranet application within 5 
business days after the disciplinary action is final, as determined by 
State law. States not reporting via the extranet application must 
provide, in writing to the ASC, a description of the circumstances 
preventing compliance with this requirement. For the most serious 
disciplinary actions (e.g., any action that interrupts an AMCs ability 
to provide appraisal management services), the AMCs status must be 
changed on the AMC Registry to ``inactive.'' A Federally regulated AMC 
operating in a State must report to the State the information required 
to be submitted by the State to the ASC, pursuant to the ASC's policies 
regarding the determination of the AMC Registry fee.
---------------------------------------------------------------------------

    \118\ See Appendix B, Glossary of Terms, for the definition of 
``disciplinary action.''
---------------------------------------------------------------------------

D. Access to AMC Registry Data
    The ASC Web site provides free access to the public portion of the 
AMC Registry at www.asc.gov. The public portion of the AMC Registry 
data may be downloaded using predefined queries or user-customized 
applications.
    Access to the full database, which includes non-public data (e.g., 
certain disciplinary action information), is restricted to authorized 
State and Federal regulatory agencies. States must designate a senior 
official, such as an executive director, to serve as the State's 
Authorized Registry Official, and provide to the ASC, in writing, 
information regarding the designated Authorized Registry Official. 
States must ensure that the authorization information provided to the 
ASC is updated and accurate. States must adopt and implement a written 
policy to protect the right of access, as well as the ASC issued User 
Name and Password.
E. Summary of Requirements
    1. States must reconcile and pay registry invoices in a timely 
manner (45 calendar days after receipt of the invoice).\119\
---------------------------------------------------------------------------

    \119\ Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    2. State agencies must report all disciplinary action taken against 
an AMC to the ASC via the extranet application within 5 business days 
after the disciplinary action is final, as determined by State 
law.\120\
---------------------------------------------------------------------------

    \120\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States not reporting via the extranet application must provide, 
in writing to the ASC, a description of the circumstances preventing 
compliance with this requirement.\121\
---------------------------------------------------------------------------

    \121\ Id.
---------------------------------------------------------------------------

    4. For the most serious disciplinary actions (e.g., any action that 
interrupts an AMC's ability to provide appraisal management services), 
the AMC's status must be changed on the AMC Registry to ``inactive.'' 
\122\
---------------------------------------------------------------------------

    \122\ Id.
---------------------------------------------------------------------------

    5. States must notify the ASC as soon as practicable if an AMC 
listed on the AMC Registry is no longer registered with or operating in 
the State.
    6. States must designate a senior official, such as an executive 
director, who will serve as the State's Authorized Registry Official, 
and provide to the ASC, in writing, information regarding the selected 
Authorized Registry Official, and any individual(s) authorized to act 
on their behalf.\123\
---------------------------------------------------------------------------

    \123\ Id.
---------------------------------------------------------------------------

    7. States must adopt and implement a written policy to protect the 
right of access to the AMC Registry, as well as the ASC issued User 
Name and Password.\124\
---------------------------------------------------------------------------

    \124\ Id.
---------------------------------------------------------------------------

    8. States must ensure the accuracy of all data submitted to the AMC 
Registry.\125\
---------------------------------------------------------------------------

    \125\ Id.

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[[Page 43980]]

Policy Statement 10

State Agency Enforcement
A. State Agency Regulatory Program
    Title XI requires the ASC to monitor the States for the purpose of 
determining whether the State processes complaints and completes 
investigations in a reasonable time period, appropriately disciplines 
sanctioned AMCs and maintains an effective regulatory program.\126\
---------------------------------------------------------------------------

    \126\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

B. Enforcement Process
    States must ensure that the system for processing and investigating 
complaints \127\ and sanctioning AMCs is administered in a timely, 
effective, consistent, equitable, and well-documented \128\ manner.
---------------------------------------------------------------------------

    \127\ See Appendix B, Glossary of Terms, for the definition of 
``complaint.''
    \128\ See Appendix B, Glossary of Terms, for the definition of 
``well-documented.''
---------------------------------------------------------------------------

1. Timely Enforcement
    States must process complaints against AMCs in a timely manner to 
ensure effective supervision of AMCs. Absent special documented 
circumstances, final administrative decisions regarding complaints must 
occur within one year (12 months) of the complaint filing date. Special 
documented circumstances are those extenuating circumstances (fully 
documented) beyond the control of the State agency that delays normal 
processing of a complaint such as: Complaints involving a criminal 
investigation by a law enforcement agency when the investigative agency 
requests that the State refrain from proceeding; final disposition that 
has been appealed to a higher court; documented medical condition of 
the respondent; ancillary civil litigation; and complex fraud cases 
that involve multiple individuals and reports. Such special documented 
circumstances also include those periods when State rules require 
referral of a complaint to another State entity for review and the 
State agency is precluded from further processing of the complaint 
until it is returned. In that circumstance, the State agency should 
document the required referral and the time period during which the 
complaint was not under its control or authority.
2. Effective Enforcement
    Effective enforcement requires that States investigate complaints, 
and if allegations are proven, take appropriate disciplinary or 
remedial action.
3. Consistent and Equitable Enforcement
    Absent specific documented facts or considerations, substantially 
similar cases within a State should result in similar dispositions.
4. Well-Documented Enforcement
    States must obtain and maintain sufficient relevant documentation 
pertaining to a matter so as to enable understanding of the facts and 
determinations in the matter and the reasons for those determinations.
a. Complaint Files
    Complaint files must:
    <bullet> Include documentation outlining the progress of the 
investigation;
    <bullet> include rationale for the final outcome of the case (i.e., 
dismissal or imposition of discipline);
    <bullet> include documentation explaining any delay in processing, 
investigation or adjudication;
    <bullet> contain documentation that all ordered or agreed upon 
discipline is tracked and that completion of all terms is confirmed; 
and
    <bullet> be organized in a manner that allows understanding of the 
steps taken throughout the complaint, investigation, and adjudicatory 
process.
b. Complaint Logs
    States must track all complaints using a complaint log. The 
complaint log must record all complaints, regardless of their 
procedural status in the investigation and/or resolution process, 
including complaints pending before the State board, Office of the 
Attorney General, other law enforcement agencies, and/or offices of 
administrative hearings. The complaint log must include the following 
information (States are strongly encouraged to maintain this 
information in an electronic, sortable format):

1. Case number
2. Name of respondent
3. Actual date the complaint was received by the State
4. Source of complaint (e.g., consumer, lender, AMC, bank regulator, 
appraiser, hotline) or name of complainant
5. Current status of the complaint
6. Date the complaint was closed (e.g., final disposition by the 
administrative hearing agency, Office of the Attorney General, State 
AMC Program or Court of Appeals)
7. Method of disposition (e.g., dismissal, letter of warning, consent 
order, final order)
8. Terms of disposition (e.g., probation, fine)
9. In the case of open complaints, the most recent activity and date 
thereof (e.g. respondent's response to complaint received, contacted 
Attorney General for a status update, Board voted to offer a consent 
agreement)
C. Summary of Requirements
    1. States must maintain relevant documentation to enable 
understanding of the facts and determinations in the matter and the 
reasons for those determinations.\129\
---------------------------------------------------------------------------

    \129\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must resolve all complaints filed against appraisers 
within one year (12 months) of the complaint filing date, except for 
special documented circumstances.\130\
---------------------------------------------------------------------------

    \130\ Id.
---------------------------------------------------------------------------

    3. States must ensure that the system for processing and 
investigating complaints and sanctioning AMCs is administered in an 
effective, consistent, equitable, and well-documented manner.\131\
---------------------------------------------------------------------------

    \131\ Id.
---------------------------------------------------------------------------

    4. States must track complaints of alleged appraiser misconduct or 
wrongdoing using a complaint log.\132\
---------------------------------------------------------------------------

    \132\ Id.
---------------------------------------------------------------------------

    5. States must appropriately document enforcement files and include 
rationale.\133\
---------------------------------------------------------------------------

    \133\ Id.
---------------------------------------------------------------------------

Policy Statement 11

Statutory Implementation Period
    Title XI and the AMC Rule set forth the statutory implementation 
period.\134\ The AMC Rule was effective on August 10, 2015. As of 36 
months from that date (August 10, 2018), an AMC may not provide 
appraisal management services for a federally related transaction in a 
non-participating State unless the AMC is a Federally regulated AMC. 
Appraisal management services may still be provided for federally 
related transactions in non-participating States by individual 
appraisers, by AMCs that are below the minimum statutory panel size 
threshold, and as noted, by Federally regulated AMCs.
---------------------------------------------------------------------------

    \134\ Title XI Sec.  1124(f)(1), 12 U.S.C. 3353 and 12 CFR 
34.210-34.216; 12 CFR 225.190-225.196; 12 CFR 323.8-323.14; 12 CFR 
1222.20-1222.26.
---------------------------------------------------------------------------

    The ASC, with the approval of the Federal Financial Institutions 
Examination Council (FFIEC), may extend this statutory implementation 
period for an additional 12 months if the ASC makes a finding that a 
State has made substantial progress toward implementing a registration 
and supervision program for AMCs that meets the standards of Title 
XI.\135\
---------------------------------------------------------------------------

    \135\ Title XI Sec.  1124(f)(2), 12 U.S.C. 3353.

---------------------------------------------------------------------------

[[Page 43981]]

Part C: Interim Sanctions

Policy Statement 12

Interim Sanctions
A. Authority
    Title XI grants the ASC authority to impose sanctions on a State 
that fails to have an effective Appraiser or AMC Program.\136\ The ASC 
may remove a State credentialed appraiser or a registered AMC from the 
Appraiser or AMC Registry on an interim basis, not to exceed 90 days, 
pending State agency action on licensing, certification, registration 
and disciplinary proceedings as an alternative to or in advance of a 
non-recognition proceeding.\137\ In determining whether an Appraiser or 
AMC Program is effective, the ASC shall conduct an analysis as required 
by Title XI. An ASC Finding of Poor on the Compliance Review Report 
\138\ issued to a State at the conclusion of an ASC Compliance Review 
may trigger an analysis by the ASC for potential interim sanction(s). 
The following provisions apply to the exercise by the ASC of its 
authority to impose interim sanction(s) on State agencies.
---------------------------------------------------------------------------

    \136\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
    \137\ Id.
    \138\ See Appendix A--Compliance Review Process.
---------------------------------------------------------------------------

B. Opportunity To Be Heard or Correct Conditions
    The ASC shall provide the State agency with:
    1. Written notice of intention to impose an interim sanction; and
    2. opportunity to respond or to correct the conditions causing such 
notice to the State.
    Notice and opportunity to respond or correct the conditions shall 
be in accordance with section C, Procedures.
C. Procedures
    This section prescribes the ASC's procedures which will be followed 
in arriving at a decision by the ASC to impose an interim sanction 
against a State agency.
1. Notice
    The ASC shall provide a written Notice of intention to impose an 
interim sanction (Notice) to the State agency. The Notice shall contain 
the ASC's analysis as required by Title XI of the State's licensing and 
certification of appraisers, the registration of AMCs, the issuance of 
temporary licenses and certifications for appraisers, the receiving and 
tracking of submitted complaints against appraisers and AMCs, the 
investigation of complaints, and enforcement actions against appraisers 
and AMCs.\139\ The ASC shall verify the State's date of receipt, and 
publish both the Notice and the State's date of receipt in the Federal 
Register.
---------------------------------------------------------------------------

    \139\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

2. State Agency Response
    Within 15 days of receipt of the Notice, the State may submit a 
response to the ASC's Executive Director. Alternatively, a State may 
submit a Notice Not to Contest with the ASC's Executive Director. The 
filing of a Notice Not to Contest shall not constitute a waiver of the 
right to a judicial review of the ASC's decision, findings and 
conclusions. Failure to file a Response within 15 days shall constitute 
authorization for the ASC to find the facts to be as presented in the 
Notice and analysis. The ASC, for good cause shown, may permit the 
filing of a Response after the prescribed time.
3. Briefs, Memoranda and Statements
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State agency may file 
with the ASC's Executive Director a written brief, memorandum or other 
statement providing factual data and policy and legal arguments 
regarding the matters set out in the Notice and analysis.
4. Oral Presentations to the ASC
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State may file a 
request with the ASC's Executive Director to make oral presentation to 
the ASC. If the State has filed a request for oral presentation, the 
matter shall be heard within 45 days. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding, and is not a Meeting \140\ 
of the ASC. On the appropriate date and time, the State agency will 
make the oral presentation before the ASC. Any ASC member may ask 
pertinent questions relating to the content of the oral presentation. 
Oral presentations will not be recorded or otherwise transcribed. 
Summary notes will be taken by ASC staff and made part of the record on 
which the ASC shall decide the matter.
---------------------------------------------------------------------------

    \140\ The proceeding is more in the nature of a Briefing not 
subject to open meeting requirements. The presentation is an 
opportunity for the State to brief the ASC--to offer, emphasize and 
clarify the facts, policies and laws concerning the proceeding, and 
for the ASC members to ask questions. Additional consideration is 
given to the fact that this stage of the proceeding is pre-
decisional.
---------------------------------------------------------------------------

5. Conduct of Interim Sanction Proceedings
(a) Written Submissions
    All aspects of the proceeding shall be conducted by written 
submissions, with the exception of oral presentations allowed under 
subsection 4 above.
(b) Disqualification
    An ASC member who deems himself or herself disqualified may at any 
time withdraw. Upon receipt of a timely and sufficient affidavit of 
personal bias or disqualification of such member, the ASC will rule on 
the matter as a part of the record.
(c) Authority of ASC Chairperson
    The Chairperson of the ASC, in consultation with other members of 
the ASC whenever appropriate, shall have complete charge of the 
proceeding and shall have the duty to conduct it in a fair and 
impartial manner and to take all necessary action to avoid delay in the 
disposition of proceedings.
(d) Rules of Evidence
    Except as is otherwise set forth in this section, relevant material 
and reliable evidence that is not unduly repetitive is admissible to 
the fullest extent authorized by the Administrative Procedure Act (5 
U.S.C. 551-559) and other applicable law.
6. Decision of the ASC and Judicial Review
    Within 90 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, or in the case of oral 
presentation having been granted, within 30 days after presentation, 
the ASC shall issue a final decision, findings and conclusions and 
shall publish the decision promptly in the Federal Register. The final 
decision shall be effective on issuance. The ASC's Executive Director 
shall ensure prompt circulation of the decision to the State agency. A 
final decision of the ASC is a prerequisite to seeking judicial review.
7. Computing Time
    Time computation is based on business days. The date of the act, 
event or default from which the designated period of time begins to run 
is not included. The last day is included unless it is a Saturday, 
Sunday, or Federal holiday, in which case the period runs until the end 
of the next day which is not a Saturday, Sunday or Federal holiday.
8. Documents and Exhibits
    Unless otherwise provided by statute, all documents, papers and 
exhibits filed

[[Page 43982]]

in connection with any proceeding, other than those that may be 
withheld from disclosure under applicable law, shall be placed by the 
ASC's Executive Director in the proceeding's file and will be available 
for public inspection and copying.
9. Judicial Review
    A decision of the ASC under this section shall be subject to 
judicial review. The form of proceeding for judicial review may include 
any applicable form of legal action, including actions for declaratory 
judgments or writs of prohibitory or mandatory injunction in a court of 
competent jurisdiction.\141\
---------------------------------------------------------------------------

    \141\ 5 U.S.C. 703--Form and venue of proceeding.
---------------------------------------------------------------------------

Appendices

Appendix A--Compliance Review Process

    The ASC monitors State Appraiser and AMC Programs for compliance 
with Title XI. The monitoring of State Programs is largely 
accomplished through on-site visits known as a Compliance Review 
(Review). A Review is conducted over a two- to four-day period, and 
is scheduled to coincide with a meeting of the Program's decision-
making body whenever possible. ASC staff reviews the Appraiser 
Program and the seven compliance areas addressed in Policy 
Statements 1 through 7. ASC staff reviews a participating State's 
AMC Program and the four compliance areas addressed in Policy 
Statements 8 through 11. Sufficient documentation demonstrating 
compliance must be maintained by a State and made available for 
inspection during the Review. ASC staff reviews a sampling of 
documentation in each of the compliance areas. The sampling is 
intended to be representative of a State Program in its entirety.
    Based on the Review, ASC staff provides the State with an ASC 
staff report for the Appraiser Program, and if applicable, an ASC 
staff report for the AMC Program, detailing preliminary findings. 
The State is given 60 days to respond to the ASC staff report(s). At 
the conclusion of the Review, a Compliance Review Report (Report) is 
issued to the State for the Appraiser Program, and if applicable, a 
Report is also issued for the AMC Program, with the ASC Finding on 
each Program's overall compliance, or lack thereof, with Title XI. 
Deficiencies resulting in non-compliance in any of the compliance 
areas are cited in the Report. ``Areas of Concern'' which 
potentially expose a Program to compliance issues in the future are 
also addressed in the Report. The ASC's final disposition is based 
upon the ASC staff report, the State's response and staff's 
recommendation.
    The following chart provides an explanation of the ASC Findings 
and rating criteria for each ASC Finding category. The ASC Finding 
places particular emphasis on whether the State is maintaining an 
effective regulatory Program in compliance with Title XI.

----------------------------------------------------------------------------------------------------------------
                                                                                         Review Cycle (program
                                                                                         history or nature of
               ASC finding                              Rating criteria                deficiency may warrant a
                                                                                        more accelerated Review
                                                                                                Cycle)
----------------------------------------------------------------------------------------------------------------
Excellent...............................  <bullet> State meets all Title XI mandates  2-year.
                                           and complies with requirements of ASC
                                           Policy Statements.
                                          <bullet> State maintains a strong
                                           regulatory Program.
                                          <bullet> Very low risk of Program failure.
Good....................................  <bullet> State meets the majority of Title  2-year.
                                           XI mandates and complies with the
                                           majority of ASC Policy Statement
                                           requirements.
                                          <bullet> Deficiencies are minor in nature.
                                          <bullet> State is adequately addressing
                                           deficiencies identified and correcting
                                           them in the normal course of business.
                                          <bullet> State maintains an effective
                                           regulatory Program.
                                          <bullet> Low risk of Program failure......
Needs Improvement.......................  <bullet> State does not meet all Title XI   2-year with additional
                                           mandates and does not comply with all       monitoring.
                                           requirements of ASC Policy Statements.
                                          <bullet> Deficiencies are material but
                                           manageable and if not corrected in a
                                           timely manner pose a potential risk to
                                           the Program.
                                          <bullet> State may have a history of
                                           repeated deficiencies but is showing
                                           progress toward correcting deficiencies.
                                          <bullet> State regulatory Program needs
                                           improvement.
                                          <bullet> Moderate risk of Program failure.
Not Satisfactory........................  <bullet> State does not meet all Title XI   1-year.
                                           mandates and does not comply with all
                                           requirements of ASC Policy Statements.
                                          <bullet> Deficiencies present a
                                           significant risk and if not corrected in
                                           a timely manner pose a well-defined risk
                                           to the Program.
                                          <bullet> State may have a history of
                                           repeated deficiencies and requires more
                                           supervision to ensure corrective actions
                                           are progressing.
                                          <bullet> State regulatory Program has
                                           substantial deficiencies.
                                          <bullet> Substantial risk of Program
                                           failure.
Poor \142\..............................  <bullet> State does not meet Title XI       Continuous monitoring.
                                           mandates and does not comply with
                                           requirements of ASC Policy Statements.
                                          <bullet> Deficiencies are significant and
                                           severe, require immediate attention and
                                           if not corrected represent critical flaws
                                           in the Program.
                                          <bullet> State may have a history of
                                           repeated deficiencies and may show a lack
                                           of willingness or ability to correct
                                           deficiencies.
                                          <bullet> High risk of Program failure.....
----------------------------------------------------------------------------------------------------------------

    The ASC has two primary Review Cycles: Two-year and one-year. 
Most States are scheduled on a two-year Review Cycle. States may be 
moved to a one-year Review Cycle if the ASC determines more frequent 
on-site Reviews are needed to ensure that the State

[[Page 43983]]

maintains an effective Program. Generally, States are placed on a 
one-year Review Cycle because of non-compliance issues or serious 
areas of concerns that warrant more frequent on-site visits. Both 
two-year and one-year Review Cycles include a review of all aspects 
of the State's Program.
---------------------------------------------------------------------------

    \142\ An ASC Finding of ``Poor'' may result in significant 
consequences to the State. See Policy Statement 5, Reciprocity; see 
also Policy Statement 12, Interim Sanctions.
---------------------------------------------------------------------------

    The ASC may conduct Follow-up Reviews and additional monitoring. 
A Follow-up Review focuses only on specific areas identified during 
the previous on-site Review. Follow-up Reviews usually occur within 
6-12 months of the previous Review. In addition, as a risk 
management tool, ASC staff identifies State Programs that may have a 
significant impact on the nation's appraiser regulatory system in 
the event of Title XI compliance issues. For States that represent a 
significant percentage of the credentials on the Appraiser Registry, 
ASC staff performs annual on-site Priority Contact visits. The 
primary purpose of the Priority Contact visit is to review topical 
issues, evaluate regulatory compliance issues, and maintain a close 
working relationship with the State. This is not a complete Review 
of the Program. The ASC will also schedule a Priority Contact visit 
for a State when a specific concern is identified that requires 
special attention. Additional monitoring may be required where a 
deficiency is identified and reports on required or agreed upon 
corrective actions are required monthly or quarterly. Additional 
monitoring may include on-site monitoring as well as off-site 
monitoring.

Appendix B--Glossary of Terms

    Appraisal management company (AMC): Refers to, in connection 
with valuing properties collateralizing mortgage loans or mortgages 
incorporated into a securitization, any external third party 
authorized either 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, that oversees 
a network or panel of more than 15 certified or licensed appraisers 
in a State or 25 or more nationally within a given year--
    (A) To recruit, select, and retain appraisers;
    (B) to contract with licensed and certified appraisers to 
perform appraisal assignments;
    (C) to manage 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 underwriters, collecting fees 
from creditors and underwriters for services provided, and 
reimbursing appraisers for services performed; or
    (D) to review and verify the work of appraisers.
    AQB Criteria: Refers to the Real Property Appraiser 
Qualification Criteria as established by the Appraiser 
Qualifications Board of the Appraisal Foundation setting forth 
minimum education, experience and examination requirements for the 
licensure and certification of real property appraisers, and minimum 
requirements for ``Trainee'' and ``Supervisory'' appraisers.
    Assignment: As referenced herein, for purposes of temporary 
practice, ``assignment'' means one or more real estate appraisals 
and written appraisal report(s) covered by a single contractual 
agreement.
    Complaint: As referenced herein, any document filed with, 
received by, or serving as the basis for possible inquiry by the 
State agency regarding alleged violation of Title XI, Federal or 
State law or regulation, or USPAP by a credentialed appraiser or 
appraiser applicant, for allegations of unlicensed appraisal 
activity, or complaints involving AMCs. A complaint may be in the 
form of a referral, letter of inquiry, or other document alleging 
misconduct or wrongdoing.
    Credentialed appraisers: Refers to State licensed, certified 
residential or certified general appraiser classifications.
    Disciplinary action: As referenced herein, corrective or 
punitive action taken by or on behalf of a State agency which may be 
formal or informal, or may be consensual or involuntary, resulting 
in any of the following:

a. Revocation of credential or registration
b. suspension of credential or registration
c. written consent agreements, orders or reprimands
d. probation or any other restriction on the use of a credential
e. fine
f. voluntary surrender \143\
---------------------------------------------------------------------------

    \143\ A voluntary surrender that is not deemed disciplinary by 
State law or regulation, or is not related to any disciplinary 
process need not be reported as discipline provided the individual's 
Appraiser Registry record is updated to show the credential is 
inactive.
---------------------------------------------------------------------------

g. other acts as defined by State statute or regulation as 
disciplinary

    With the exception of voluntary surrender, suspension or 
revocation, such action may be exempt from reporting to the National 
Registry if defined by State statute, regulation or written policy 
as ``non-disciplinary.''
    Federally related transaction: Refers to any real estate related 
financial transaction which:
    (a) A federal financial institutions regulatory agency engages 
in, contracts for, or regulates; and
    (b) requires the services of an appraiser. (See Title XI Sec.  
1121(4), 12 U.S.C. 3350.)
    Federal financial institutions regulatory agencies: Refers to 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Office of the Comptroller of the 
Currency, and the National Credit Union Administration. (See Title 
XI Sec.  1121(6), 12 U.S.C. 3350.)
    Home State agency: As referenced herein, State agency or 
agencies that grant an appraiser a licensed or certified credential. 
Residency in the home State is not required. Appraisers may have 
more than one home State agency.
    Non-federally recognized credentials or designations: Refers to 
any State appraiser credential or designation other than trainee, 
State licensed, certified residential or certified general 
classifications as defined in Policy Statement 1, and which is not 
recognized by Title XI.
    Real estate related financial transaction: Any transaction 
involving:
    (a) the sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof;
    (b) the refinancing of real property or interests in real 
property; and
    (c) the use of real property or interests in property as 
security for a loan or investment, including mortgage-backed 
securities. (See Title XI Sec.  1121(5), 12 U.S.C. 3350.)
    State: Any State, the District of Columbia, the Commonwealth of 
Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, 
and the United States Virgin Islands. (American Samoa does not have 
a Program.)
    State board: As referenced herein, ``State board'' means a group 
of individuals (usually appraisers, AMC representatives, bankers, 
consumers, and/or real estate professionals) appointed by the 
Governor or a similarly positioned State official to assist or 
oversee State Programs. A State agency may be headed by a board, 
commission or an individual.
    Uniform Standards of Professional Appraisal Practice (USPAP): 
Refers to appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation establishing minimum requirements 
for development and reporting of appraisals, including real property 
appraisal. Title XI requires appraisals prepared by State certified 
and licensed appraisers to be performed in conformance with USPAP.
    Well-documented: Means that States obtain and maintain 
sufficient relevant documentation pertaining to a matter so as to 
enable understanding of the facts and determinations in the matter 
and the reasons for those determinations.
* * * * *

    By the Appraisal Subcommittee.

    Dated: September 13, 2017.
Arthur Lindo,
Chairman.

[FR Doc. 2017-19998 Filed 9-19-17; 8:45 am]
 BILLING CODE 6700-01-P


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