Source: https://www.federalregister.gov/documents/2017/09/20/2017-19998/appraisal-subcommittee-proposed-revised-policy-statements
Timestamp: 2019-10-14 13:22:39
Document Index: 474674482

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A Notice by the Federal Financial Institutions Examination Council on 09/20/2017
43966-43983 (18 pages)
Docket No. AS17-06
ASC-2017-0005
a. Experience Hours Validation
https://www.federalregister.gov/d/2017-19998 https://www.federalregister.gov/d/2017-19998
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:
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.
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 Start Printed Page 43967AMC 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.
➢ 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.
➢ 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.
➢ 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:
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.
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.
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.
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.
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 Start Printed Page 43968Programs 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.
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.
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 Start Printed Page 43969register and supervise the operations and activities of appraisal management companies [12] (AMCs).[13]
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
AMC Rule.[15]
➢ 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.
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.
Any State or Federal agency may impose additional appraiser qualification requirements for trainee, State licensed, certified residential or Start Printed Page 43970certified 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.
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.
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 Start Printed 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.
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 Start Printed Page 43972stating, “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.
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]
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:
(5) If a State determines that a renewal applicant knowingly falsely attested to completing the continuing education Start Printed Page 43974required 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.
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.
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.
Experience time periods must conform to requirements set forth in the AQB Criteria for the credential sought.
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.
8. In the case of a renewal being processed after the credential's Start Printed Page 43975expiration 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]
4. States must select the work product to validate the experience hours claimed on all initial or upgrade applications for appraiser credentialing.[75]
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]
8. Experience time periods must conform to requirements set forth in the AQB Criteria for the credential sought.[79]
1. States must ensure that an appropriate AQB-approved qualifying examination is administered for each of the federally recognized credentials requiring an examination.[80]
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:
(ii) the credentialing requirements of the Home State [82] meet or exceed those of the reciprocal credentialing State (Reciprocal State).[83]
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.”
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.
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.
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 Start Printed Page 43976distinguish between credentials obtained by examination and credentials obtained by reciprocity for purposes of granting reciprocal credentials.
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]
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]
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]
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]
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]
States are encouraged to accept courses approved by the AQB's Course Approval Program.
1. States must ensure that appraiser education courses are consistent with AQB Criteria.[90]
2. States must maintain sufficient documentation to support that approved appraiser courses conform to AQB Criteria.[91]
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]
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]
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.
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 Start Printed Page 43977time period during which the complaint was not under its control or authority.
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]
The complaint log must include the following information (States are strongly encouraged to maintain this information in an electronic, sortable format):
1. States must maintain relevant documentation to enable understanding of the facts and determinations in the matter and the reasons for those determinations.[97]
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]
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]
4. States must track complaints of alleged appraiser misconduct or wrongdoing using a complaint log.[100]
5. States must appropriately document enforcement files and include rationale.[101]
6. States must regulate, supervise and discipline their credentialed appraisers.[102]
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]
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:
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 Start Printed Page 43978the 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.
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.
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.
(3) Verify that appraisers on AMCs' panels hold valid State credentials;
(b) The AMC Rule includes requirements for participating States to impose requirements on AMCs that are not Federally regulated AMCs [107] to:
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.
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.
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 Start Printed Page 43979has 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.
1. Participating States must establish and maintain an AMC Program with the legal authority and mechanisms consistent with the AMC Rule.[110]
2. Participating States must impose requirements on AMCs consistent with the AMC Rule.[111]
3. Participating States must enforce and document ownership limitations for State-registered AMCs.[112]
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]
5. States must have funding and staffing sufficient to carry out their Title XI-related duties.[114]
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]
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).
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.
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.
1. States must reconcile and pay registry invoices in a timely manner (45 calendar days after receipt of the invoice).[119]
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]
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]
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]
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]
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]
8. States must ensure the accuracy of all data submitted to the AMC Registry.[125]
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]
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.
1. States must maintain relevant documentation to enable understanding of the facts and determinations in the matter and the reasons for those determinations.[129]
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]
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]
4. States must track complaints of alleged appraiser misconduct or wrongdoing using a complaint log.[132]
5. States must appropriately document enforcement files and include rationale.[133]
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.
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]
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.
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.
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.
Unless otherwise provided by statute, all documents, papers and exhibits filed Start Printed Page 43982in 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.
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]
Review Cycle (program history or nature of deficiency may warrant a more accelerated Review Cycle)
Excellent • State meets all Title XI mandates and complies with requirements of ASC Policy Statements 2-year.
• State maintains a strong regulatory Program
• Very low risk of Program failure
Good • State meets the majority of Title XI mandates and complies with the majority of ASC Policy Statement requirements 2-year.
• Deficiencies are minor in nature
• State is adequately addressing deficiencies identified and correcting them in the normal course of business
• State maintains an effective regulatory Program
• Low risk of Program failure
Needs Improvement • State does not meet all Title XI mandates and does not comply with all requirements of ASC Policy Statements 2-year with additional monitoring.
• Deficiencies are material but manageable and if not corrected in a timely manner pose a potential risk to the Program
• State may have a history of repeated deficiencies but is showing progress toward correcting deficiencies
• State regulatory Program needs improvement
• Moderate risk of Program failure
Not Satisfactory • State does not meet all Title XI mandates and does not comply with all requirements of ASC Policy Statements 1-year.
• Deficiencies present a significant risk and if not corrected in a timely manner pose a well-defined risk to the Program
• State may have a history of repeated deficiencies and requires more supervision to ensure corrective actions are progressing
• State regulatory Program has substantial deficiencies
• Substantial risk of Program failure
Poor 142 • State does not meet Title XI mandates and does not comply with requirements of ASC Policy Statements Continuous monitoring.
• Deficiencies are significant and severe, require immediate attention and if not corrected represent critical flaws in the Program
• State may have a history of repeated deficiencies and may show a lack of willingness or ability to correct deficiencies
• 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 Start Printed Page 43983maintains 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.
f. voluntary surrender [143]
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 § 1121(6), 12 U.S.C. 3350.)
(c) the use of real property or interests in property as security for a loan or investment, including mortgage-backed securities. (See Title XI § 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.)
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 § 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)
11. Public Law. 111-203, 124 Stat. 1376.
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 § 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.)
20. See Appendix B, Glossary of Terms for the definition of “Uniform Standards of Professional Appraisal Practice.”
33. Title XI § 1122(a)(2), 12 U.S.C. 3351.
38. Title XI § 1103(a)(3), 12 U.S.C. 3332.
81. Title XI § 1122(b), 12 U.S.C. 3351.
82. As they exist at the time of application for reciprocal credential.
84. See Appendix A, Compliance Review Process, for an explanation of ASC Findings.
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.
86. Title XI § 1122(b), 12 U.S.C. 3351.
88. Title XI § 1118(a), 12 U.S.C. 3347.
89. For example:
90. Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria.
91. Title XI § 1118(a), 12 U.S.C. 3347.
92. Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria.
93. Title XI § 1118(a), 12 U.S.C. 3347.
94. See Appendix B, Glossary of Terms, for the definition of “complaint.”
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.
96. Title XI § 1117, 12 U.S.C. 3346.
97. Title XI § 1118(a), 12 U.S.C. 3347.
104. Title XI § 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.
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.
106. See footnote 107.
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 § 1124(c), 12 U.S.C. 3353(c)).
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.)
109. See footnote 107.
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.
113. Title XI § 1118(b), 12 U.S.C. 3347.
115. Title XI § 1103(a)(6), 12 U.S.C. 3332.
116. Title XI § 1109(a)(4), 12 U.S.C. 3338.
117. Title XI § 1109(a)(3) and (4), 12 U.S.C. 3338.
118. See Appendix B, Glossary of Terms, for the definition of “disciplinary action.”
119. Title XI § 1118(a), 12 U.S.C. 3347; Title XI § 1109(a), 12 U.S.C. 3338.
120. Title XI § 1118(a), 12 U.S.C. 3347.
126. Title XI § 1118(a), 12 U.S.C. 3347.
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.”
129. Title XI § 1118(a), 12 U.S.C. 3347.
134. Title XI § 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.
135. Title XI § 1124(f)(2), 12 U.S.C. 3353.
136. Title XI § 1118(a), 12 U.S.C. 3347.
138. See Appendix A—Compliance Review Process.
139. Title XI § 1118(a), 12 U.S.C. 3347.
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.
141. 5 U.S.C. 703—Form and venue of proceeding.
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.
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.
[FR Doc. 2017-19998 Filed 9-19-17; 8:45 am]